UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


\ 


CASES  ON  THE  LAW 


OP 


BILLS,  NOTES,  AND  CHEQUES. 


To  accompany  this  volume. 

ELEMENTS  OF  THE  LAW  OF  BILLS,  NOTES,  AND 
CHEQUES,  FOR  STUDENTS.  By  Melville  M. 
BiGELOW,  Ph.D. 


CASES 


ON 


THE  LAW  OF   BILLS,  NOTES, 
AND  CHEQUES 


TO  ACCOMPANY  THE  EDITOR'S   WORK 
ON  THAT   SUBJECT 


EDITED    BY 

MELVILLE    M.    BIGELOW 

Ph.D.  Harvard 


BOSTON 
LITTLE,   BROWN,   AND   COMPANY 

1894 


T 

\8M 


Copyriijht,  1894 
By  Melville  M.  Bigelow 


c  C  ,- ,.  .^ 


University  Press 
John  Wilson  and  Son,  Cambridge,  U.S.A. 


:n^  O  T  E. 

The  cases  contained  in  this  volume  are  selected  to 
accompany  the  editor's  work  on  the  Law  of  Bills,  Notes, 
and  Cheques,  of  the  Students'  Series ;  and  they  follow 
the  order  of  the  text  of  that  book. 

The  editor  has  generally  rewritten  the  headnotes  of 
^  the  cases,  putting  them  of  set  purpose  in  the  form  of 
^  briefly-stated  rules  of  law.     The  headnotes  thus  furnish 
a  text  for  what  follows,  and  help  to  make  the  report  of 
■^,  the   case   complete   after  the    manner  of   original  law 
.-  reports.     They  cannot  tempt  the  student  to  cut  short 
^  his  work  and  take  them  as  a  substitute  for  what  fol- 
lows, or   even   as  an  epitome  of   it,  for  the  deduction 
of  rules  is  no  more  than  an  incident  of   the  study  of 
cases. 

Statements  of  fact,  too,  when  not  contained  in  the 
opinion,  have  often  been  rewritten,  especially  when 
clearness  and  space  could  be  gained.  Matter  foreign 
to  the  subject  in  hand  has  been  omitted,  as  well  from 
the  opinion  as  from  the  statement  preceding,  where, 
and  only  where,  the  omission  could  not  affect  the 
completeness  of  what  was  left. 

The  report  of  a  case  usually  consists  of  five  separable 
parts;   and  to  bring  about  the  best  results  the  report 


IV  NOTE. 

should  be  studied  accordingly,  part  by  part,  in  natural 
order.  The  parts,  and  their  order  of  sequence,  are 
these :  — 

1.  Nature  of  the  action  (e.  g.,  indorsee  against  maker  of 
a  note). 

2.  Essential  facts. 

3.  Point  or  points  in  dispute. 

4.  Decision  (e.  g.,  instrument  not  negotiable). 

5.  Ground  of  decision. 

Taking  up  the  work  accordingly,  the  student  should 
not  leave  a  case  until  he  can  state  it,  without  hesitation, 
clearly  and  effectively  from  beginning  to  end. 


CASES    KEPORTED. 


Adams  v.  King   .     .     . 
Aldous  V.  Coruwell . 
Allen,  Fai'nsworth  v.    . 
Arnold  v.  Dresser    . 
Aymar  v.  Sheldon    . 

Baldwin,  Munn  v.    .     . 
Bank     of    Alexandria 

Swann 

Bank  of  Commerce  v.  Union 

Bank 

Bank    of    United    States 

Mills  I- 

Bank  of  Utica  v.  Bender 
Bay  V.  Coddington  . 
Bayley  ;-'.  Taber  . 
Belcher  v.  Smith 
Bender,  Bank  of  Utica  v. 
Berkshire  Bank  v.  Jones 
Bethell,  Morris  v.     . 
Bowling  V.  Harrison 
Brown    v.    Butchers'    and 

Drovers'  Bank      .     . 
Brown,  West  i-.  . 
Burkhalter  v.  Second  Na 

tional  Bank  of  Erie  . 
Burr,  Hale  v.  ... 
Burson  t'.  Huntington  . 
Bush,  Townsend  r. 


Page 

14 
2U 
148 
209 
373 

176 

177 

249 


152 
191 
296 
286 
219 
191 
212 
277 
171 

77 
108 

(56 
142 
227 

94 


Page 

Butchers'     and     Drovers' 

Bank,  Brown  v.    .     .     .  77 

Carew  v.  Duckworth     .     .  59 

Carrier  v.  Sears  ....  282 

Carter  r.  Union  Bank  .     .  378 

Chapman  v.  Keane  .     .     .  1G7 

Charles,  Montelius  v.    .     .  122 

Chester  v.  Dorr   ....  319 

Clarke,  Davis  v.       ...  45 

Coddington,  Bay  v.       .     .  296 

Coit,  Paton  r 311 

Cornwell,  Aldous  v.      .     .  244 

Crist  I'.  Crist 78 

Dale  V.  Gear 84 

Dana  v.  Sawyer  .     .     .     .  146 

Davis  V.  Clarke  ....  45 

Dennis,  Gilbert  v.    .     .     .  157 
Dix,    Shoe    and     Leather 

National  Bank  v.       .     .  25 

Dobbins,  Taylor  v.  .     .     .  25 

Dodge,  Worden  v.    .     .     .  19 

Dorr,  Chester  v 319 

Downer,  Sylvester  v.    .     .  85 

Downs,  Erwin  v.      .     .     .  93 

Dresser,  Arnold  v.   .     .     .  209 

Duckworth,  Carew  v.    .     .  59 

Dunlop  V.  Silver      ...  1 


VI 


CASES  REPORTED. 


/ 

Page 

EUicott,  Grant  v.     .     .     . 

214 

Erwin  v.  Downs       .     .     • 

93 

Exchange     Bank    of     St. 

Louis  V.  Rice  .... 

49 

Farmers'  Bank  of  Salem, 

Lawson  v 

179 

Farmers'  and   Mechanics' 

Bank  v.  Rathbone     .     . 

342 

Farnsworth  i'.  Allen     .     . 

148 

Fearing,  State  Bank  v.     . 

91 

Forster,  Whistler  v.      .     . 

73 

Foster  v.  Mackinnon    .     . 

237 

Foster  v.  Parker .... 

207 

Gear,  Dale  v 84 

Gheen,  Worrall  v.    .     .     .  256 

Gilbert  v.  Dennis     .     .     .  157 

Goodman  v.  Harvey     .     .  293 

Grant  v.  Ellicott      ...  214 

Guild,  Wheeler  v.    .     .     .  365 


Hale  V.  Burr 

Harrison,  Bowling  v.  .  . 
Harvey,  Goodman  v.  .  . 
Hascall  v.  Whitmore  .  . 
Haskell  v.  Lambert  .  . 
Heramingway,  Kelley  v.  . 
Henrietta  National  Bank 
V.  State  National  Bank  . 
Henshaw,  Hortsman  v. 
Hershey,  Works  v.  .     .     . 

Holmes  v.  Trumper      .     . 

Horr,  Sperry  v 

Hortsman  v.  Henshaw 

Hungerford,  Seabury  v.     . 

Huntington,  Bursou  ;;. 

Jones,  Berkshire  Bank  v. 
Jones,  Lehman  r.     .     .     . 


142 
171 
293 
326 
22 
20 

56 
274 

24 
258 

15 
274 

29 
227 

212 
211 


Page 

Keane,  Chapman  v.      .     .  167 

Kelley  i'.  Hemmingway     .  20 

King,  Adams  v 14 

Kinyon  v.  Stanton  ...  64 

Knox,  Shaw  v 83 


100 

22 


Lake,  Musson  v.      .     . 

Lambert,  Haskell  v. 

Lancaster  Savings  Insti- 
tution, Shoenberger  v.    .  169 

Lawrence    County    Bank, 

Moses  V 221 

Lawson  v.  Farmers'  Bank 

of  Salem 179 

Leavitt  v.  Putnam   .     .     .  317 

Lehman  v.  Jones      .     .     .  211 

Loring,  Sohier  v.     .     •     •  334 

Mackinnon,  Foster  v.    .     .  237 
Madison    Square   Bank  v. 

Pierce 356 

Marks,  Mattison  y.  .     .     .  18 

Mathews,  Sigerson  v.    .     .  204 

Mattison  v.  Marks    ...  18 
McKleroy  v.  Southern  Bank 

of  Kentucky     ....  270 

McLemore  v.  Powell     .     .  329 

ISlerritt,  Quinby  v.   .     .     .  11 
Mills   V.  Bank   of   United 

States 152 

Minot  V.  Russ      ....  69 

Montelius  v.  Charles     .     .  122 

Morris  v.  Bethell      ...  277 
Moses  V.  Lawrence  County 

Bank 221 

Munn  V.  Baldwin     .     .     .  176 

Musson  V.  Lake  ....  100 

Neal,  Price  v 267 

Newcomb  v.  Raynor     .     .  328 

Norton,  Windham  Bank  v.  132 


CASES  EEPORTED. 


vil 


Page 

Oridge  i'.  Sherborne     .     .  127 
Otsego    County    Bank    v. 

Warren 150 

Parker,  Foster  v.      .     .     .  207 

Paton  V.  Coit 311 

Peruvian    Railways    Co.    w. 
Tliaines  and  Mersey  In- 
surance Co 284; 

Pettee  v.  Prout    ....  225 
Pierce,    Madison     Square 

Bank  v 356 

Powell,  McLemore  v.   .     .  329 

Pi'att,  Spear  v 48 

Price  V.  Neal 267 

Prout,  Pettee  v 225 

Putnam,  Leavitt  v.  .     .     .  317 


Quinby  v.  ]Merritf 


11 


Rathbone,    Farmers'    and 

Mechanics'  Bank  v.  .     .  342 

Raynor,  Newcomb  v.  .  .  328 
Rice,  Exchange   Bank  of 

St.  Louis  V 49 

Ross,  Swope  V 361 

Russ,  Minot  v 69 

Sawyer,  Dana  v.       .     .     .  146 

Seabury  v.  Hungerford     .  29 

Sears,  Carrier  v.  ...  282 
Second  National  Bank  of 

Erie,  Burkhalter  v.    .     .  66 

Shaw  ».  Knox     .     .     .     .  83 

Sheldon,  Ay  mar  v.  .     .     .  373 

Sherborne,  Oridge  v.  .  .  127 
Shoe  and  Leather  National 

Bank  o.  Dix  ....  25 
Shoenberger  v.   Lancaster 

Savings  Institution    .     .  169 


Sigerson  v.  IMathews 
Silver,  Dunloji  v. 
Small  V.  Smith  . 
Smith,  Belcher  v. 
Smith,  Small  v.  . 
Snyder,  Taylor  r. 
Sohier  r.  Loring 
Southern    Bank    of    Ken 

tucky,  McKleroy  v.  .* 
Spear  v.  Pratt 
Sperry  v.  Horr     .     .     . 
Stanton,  Kinyon  v.  . 
State  Bank  v.  Fearing  . 
State     Capital     Bank     v 

Thompson  .... 
State  National  Bank,  Hen 

rietta  National  Bank  v. 
Steele,  Wood  v.   .     .     . 
Stetson,  Walker  v.  .     . 
Swann,  Bank  of   Alexan 

dria  v 

Swift  V.  Tyson  .  .  . 
Swope  V.  Ross  .  .  . 
Sylvester  v.  Downer 


Page 

204 
1 
215 
219 
215 
111 
334 

270 
48 
15 
64 
91 

290 

56 
253 
195 

177 

300 

361 

35 


Taber,  Bayley  v.      .     .     .  286 

Taylor  v.  Dobbins    ...  25 

Taylor  v.  Snyder      .     .     .  Ill 
Thames   and    Mersey   In- 
surance   Co. ,    Peruvian 

Railways  Co.  v.    .     .     .  284 
Thompson,    State    Capital 

Bank  v 290 

Townsend  v.  Bush   ...  94 

Trumper,  Holmes  v.     .     .  258 

Tyson,  Swift  v 300 

Union  Bank,  Bank  of  Com- 
merce V 219 

Union  Bank,  Carter  v.       .  378 


VIU 


CASES  REPORTED. 


Union  Bank  of  Weymouth 
and  Braintree  v.  Willis  . 


Page 


38 


Walker  v.  Stetson    .     .     .  195 
Warren,    Otsego     County 

Bank  v •  150 

West  V.  Brown    ....  108 

Wheeler  v.  Guild     .     .     .  365 

Whistler  v.  Forster  ...  73 


Page 
Whitinore,  Hascall  v.   .     .  S2G 
Willis,     Union     Bank    of 
Weymouth    and    Brain- 
tree  V 38 

Windham  Bank  v.  Norton  132 

Wood  V.  Steele    ....  253 

Worden  v    Dodge    ...  19 

Works  V.  Ilershey    ...  24 

Worrall  v.  Gheen     .     .     .  256 


CASES 


ON 


BILLS,  NOTES,  AND  CHEQUES. 


DUNLOP  V.  SILVER. 

Circuit  Court,  District  of  Columbia,  July,  1801.     1  Cranch,  367. 

A  remote  indorser  of  a  negotiable  promissory  note,  in  Virginia  law,  is 
liable  to  the  holder.^ 

James  Cavan  made  a  promissory  note  payable  to  Silver  et 
al.  or  order,  sixty  days  after  date,  in  the  sum  of  $600,  for 
value  received,  negotiable  at  the  Bank  of  Alexandria.  Sil- 
ver et  al.  indorsed  the  note  to  Downing  &  Dowell,  who  in- 
dorsed it,  'Pay  the  contents  to  John  Dunlop  or  order.' 
Dunlop  had  obtained  judgment  and  execution  against  the 
maker,  who  took  the  oath  of  an  insolvent  debtor.  He  now 
sued  Silver  as  indorser. 

Two  Counts.  1.  A  special  count  stating  the  making  and 
indorsing,  the  suit,  judgment,  execution,  and  insolvency  of 
the  maker,  by  reason  whereof  the  defendant  became  liable, 

1  At  the  February  term,  1803,  of  the  Supreme  Court  of  the  United 
States,  it  was  held,  contrary  to  the  decision  in  this  case,  on  error  to  the 
same  court,  that  by  the  law  of  Virginia  an  indorsee  of  a  promissory  note 
could  not  maintain  an  action  against  a  remote  indorser  for  want  of  privity. 
Mandeville  v.  Riddle,  1  Cranch,  290.  The  case  supra,  thus  overruled,  is 
reported  in  Cranch  as  an  Appendix  to  Mandeville  v.  Riddle.  Its  value 
consists  entirely  in  its  exhaustive  historical  review  of  the  authorities, 
going  back  as  it  does  to  the  very  beginning  of  actions  in  the  Superior 
Courts. 


2  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

etc.  2.  Indebitatus  assumpsit  for  money  had  and  received. 
Plea,  non  assumpsit,  and  verdict  for  the  plaintiff  subject  to 
the  opinion  of  the  court  whether  the  holder  can  maintain 
an  action  against  the  remote  indorser  of  a  promissory  note, 
under  Virginia  law.  The  statute  of  3  &  4  Anne,  c.  9,  was 
not  in  force  in  that  State  ;  but  an  Act  of  1786,  c.  29,  existed, 
by  which  '  an  action  of  debt  may  be  maintained  upon  a  note 
or  writing  by  which  the  person  signing  the  same  shall  prom- 
ise or  oblige  himself  to  pay  a  sum  of  money,  or  quantity  of 
tobacco,  to  another,'  and  that  '  assignments  of  bonds,  bills, 
and  promissory  notes,  and  other  writings  obligatory,  for 
payment  of  money  or  tobacco,  shall  be  valid ;  and  an  as- 
signee of  any  such  may  thereupon  maintain  an  action  of 
debt  in  his  own  name,  but  shall  allow  all  just  discounts, 
not  only  against  himself,  but  against  the  assignor,  before 
notice  of  the  assignment  was  given  to  the  defendant.' 

[The  decision  by  Kilty,  C.  J.,  and  Ckanch,  Assist.  J., 
was  in  favor  of  the  plaintiff,  an  opinion  —  by  which  judge 
is  not  stated  —  having  been  delivered  which  occupies  nearly 
a  hundred  pages  in  C ranch.  No  question  of  the  kind  is 
ever  raised  nowadays,  and  there  is  no  occasion  to  follow, 
in  detail,  the  elaborate  examination  of  the  subject  made  by 
the  court.  It  is  enough,  so  far  as  that  is  concerned,  to  re- 
mind the  student  that  the  case  is  an  invaluable  storehouse 
of  the  law  of  bills  of  exchange  and  promissory  notes,  from  its 
first  emergence  in  the  law  reports  down  to  the  time  of  the 
decision.  Nowhere  else  can  there  be  found  such  an  exhaus- 
tive review  of  the  authorities.  It  must  suffice  here  to  make 
some  important  extracts  from  the  opinion,  with  a  view  to 
showing  how  the  custom  of  merchants  touching  these  in- 
struments came  to  be  grafted  upon  the  law  of  England]. 

[P.  368.]  A  distinction  seems  to  have  been  made  very 
early  between  the  contracts  of  merchants  (especially  of  for- 
eign merchants)  and  those  of  other  people.  Nearly  six  hun- 
dred years  ago  we  find  their  '  old  and  rightful  customs  ' 
protected  by  the  great  charter  of  English  liberties.     Magna 


DI^NLOP   V.   SILVER.  3 

Charta,  c.  30.  .  .  .  In  the  13  Edw.  VI.  9,  10,  cited  by  Mol- 
loy,  book  3,  c.  7,  §  15,  it  is  said  that  '  a  merchant  stranger 
made  suit  before  the  King's  Privy  Council,  for  certain  bales 
of  silk  feloniously  taken  from  him,  wherein  it  was  moved 
that  this  matter  should  be  determined  at  common  law ;  but 
the  Lord  Chancellor  answered,  that  this  suit  is  brought  by 
a  merchant  who  is  not  bound  to  sue  according  to  the  law  of 
the  land,  nor  to  tarry  the  trial  of  twelve  men.'  [The  argu- 
ment is  that  the  custom  of  merchants  had  come  to  be 
treated,  before  the  statute  of  Anne,  as  part  of  the  common 
law.] 

[P.  375.]  Porms  of  pleading  often  tend  to  elucidate  the 
law.  By  observing  the  forms  of  declarations  which  have  from 
time  to  time  been  adopted  in  actions  upon  bills  of  exchange, 
we  may  perhaps  discover  the  steps  by  which  the  courts  al- 
lowed actions  to  be  brought  upon  them  as  substantive  causes 
of  action,  without  alleging  any  consideration  for  the  making 
or  accepting  them.  The  first  forms  which  were  used  take 
no  notice  of  the  custom  of  merchants  as  creating  a  liability 
distinct  from  that  which  arises  at  common  law,  but  by 
making  use  of  several  fictions  bring  the  case  within  the 
general  principles  of  actions  of  assumpsit.  The  oldest 
form  which  is  recollected  is  to  be  found  in  Eastell's  En- 
tries,^ fol.  10  (a),  under  the  head  '  Action  on  the  case  upon 
promise  to  pay  money.'  .  .  .  This  declaration  sets  forth 
that  A  complains  of  B,  &c.,  for  that  whereas  the  said  A,  by 
a  certain  I  C,  his  sufficient  attorney,  factor,  and  deputy  in 
this  behalf,  on  such  a  day  and  year,  at  L,  at  the  special  in- 
stance and  request  of  the  said  B,  had  delivered  to  the  said 
B,  by  the  hands  of  the  said  I  C,  to  the  proper  use  of  the 
said  B,  £110  8s.  Ad.,  lawful  money  of  England ;  for  which 
said  £110  Ss.  Ad.,  so  to  the  saidB  delivered,  he,  the  said 
B,  then  and  there  to  the  said  I  C  (then  being  the  sufficient 

^  Published  at  first  in  the  year  1564,  but  later  editions  contain  the  case 
below,  of  37  Eliz. 


4  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

attorney,  factor,  and  deputy  of  the  said  A  in  this  behalf) 
faithfully  promised  and  undertook  that  a  certain  John  of  G 
well  and  faithfully  would  content  and  pay  to  Reginald  S 
(on  such  a  day  and  year,  and  always  afterwards,  hitherto 
the  sufficient  deputy,  factor,  and  attorney  of  the  said  A  in 
this  behalf)  443§  ducats,  on  a  certain  day  in  the  declaration 
mentioned.  And  if  the  aforesaid  John  of  G  should  not  pay 
and  content  the  said  Reginald  S  the  said  443f  ducats,  at  the 
time  above  limited,  that  then  the  said  B  would  well  and 
faithfullj^  pay  and  content  the  said  A  £110  8s.  4c?.,  law- 
ful money  of  England,  with  all  damages  and  interest 
thereof,  Avhenever  he  should  be  thereunto  by  the  said  A 
requested.  It  then  avers  that  the  said  4435  ducats  were  of 
the  value  of  £110  8s.  M.,  lawful  money  of  England,  that 
John  of  G  had  not  paid  the  ducats  to  Reginald  S,  and  that 
if  he  had  paid  them  '  to  the  said  R  [eginald],  I,  B  and  their 
associates,  or  to  either  of  them,  then  the  said  443|  ducats 
would  have  come  to  the  benefit  and  profit  of  the  said  A. 
Yet  the  said  B,  contriving  the  aforesaid  A  of  the  said 
£110  8s.  id.,  and  of  the  damages  and  interest  thereof, 
falsely  and  subtly  to  deceive  and  defraud,  the  same  or  any 
part  thereof,  to  the  said  A  although  often  thereunto  re- 
quired, according  to  his  promise  and  undertaking  aforesaid, 
had  not  paid,  or  in  any  manner  contented,  whereby  the  said 
A,  not  only  the  profit  and  gain  which  he,  the  said  A,  with 
the  said  £110  8s.  id.  in  lawfully  bargaining  and  carrying 
on  commerce  might  have  acquired,  hath  lost ;  but  also  the 
said  A,  in  his  credit  towards  divers  subjects  of  our  lord 
the  king  (especially  towards  R  H  and  I  A,  to  whom  the 
said  A  was  indebted  in  the  sum  of  £110  8s.  4c?.,  and  to 
whom  the  said  A  had  promised  to  pay  the  same  £110  8s.  id. 
at  a  day  now  past,  in  the  hope  of  a  faithful  performance  of 
the  promise  and  undertaking  aforesaid),  is  much  injured,  to 
his  damage,'  &c.  This  declaration  seems  to  have  been  by 
the  indorsee  of  a  bill  of  exchange  against  the  drawer.  .  .  .  A  is 
supposed  to  make  I  C  his  attorney  for  the  purpose  of  paying 
£110  to  B  and  to  receive  a  promise  from  B  that  John  of  G 


DUNLOr   V.   SILVER.  O 

should  pay  to  Reginald.  S  443  ducats.  And  A  is  also  sup- 
posed to  have  made  Reginald  S  his  attorney  for  the  purpose 
of  receiving  the  ducats.  .  .  .  [These  and  the  like  allegations 
are  considered  to  be  fictions.] 

[P.  377.]  In  the  declaration  of  payee  v.  acceptor,  fol. 
338  (a),  [of  Rastell],  the  foreign  merchant  who  paid  the  1400 
crowns  to  the  drawer  of  the  bill  in  France,  to  be  remitted 
to  the  plaintiff  (the  payee)  in  England,  is  stated  to  be  the 
plaintiff's  factor ;  and  the  drawer  of  the  bill  is  stated  to  be 
the  factor  of  the  defendant  (the  acceptor)  ;  so  that  the 
plaintiff,  by  his  factor,  is  supposed  to  pay  to  the  defendant, 
through  the  medium  of  the  defendant's  factor,  the  1400 
crowns,  in  consideration  of  which  it  is  averred  that  the  de- 
fendant in  England  promised  the  plaintiff  to  pay  him  £414 
8s.  4cZ.,  lawful  money  of  England. 

This  declaration  sets  forth  that  whereas  the  plaintiff  on 
the  tenth  of  June,  37  Eliz.,  at  Eochelle  in  France,  in  parts 
beyond  seas,  by  the  hands  of  a  certain  T  S,  then  the  factor 
of  the  plaintiff,  at  the  request  of  a  certain  R  W,  then  the 
factor  of  the  defendant,  delivered  and  paid  to  the  said 
R  W,  then  the  factor  of  the  defendant,  to  the  use  of 
the  defendant,  as  much  ready  money  as  amounted  to  1400 
French  crowns  of  the  money  of  France,  in  parts  beyond 
sea,  at  the  rate  of  5s.  lie/.,  lawful  money  of  England, 
for  each  French  crown.  And  thereupon  the  said  R  W, 
at  Rochelle  aforesaid,  then  delivered  to  the  said  T  S 
three  bills  of  exchange,  viz.,  first,  second,  and  third ; 
in  the  first  of  which  bills  of  exchange  the  said  R  W 
requested  the  defendant  to  pay  to  the  plaintiff  at  L 
£414  8s.  4(Z.,  lawful  money  of  England,  at  the  end  of 
thirty  days  next  after  sight  of  that  bill  of  exchange  (the 
second  and  third  bills  of  exchange  to  the  plaintiff  not  paid). 
It  then  sets  forth  the  tenor  of  the  second  and  third  bills,' 
and  then  avers  that  the  defendant,  on  the  day  and  year  first 
aforesaid,  at  the  city  of  E.  .  .  .  in  consideration  thereof, 
undertook,  and  to  the  plaintiff  then  and  there    faithfully 


6  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

promised,  that  he,  the  defendant,  will  and  faithfully  would 
pay  to  the  plaintiff,  to  the  plaintiff's  use,  at  the  city  of  E 
...  by  way  of  exchange,  according  to  the  usage  of  mer- 
chants, the  aforesaid  £414  8s.  4f?.,  lawful  money  of  England, 
at  the  end  of  thirty  days  next  after  sight  of  any  of  the  bills 
of  exchange  aforesaid ;  and  the  plaintiff  in  fact  saith  that 
afterward,  viz.,  on  the  1st  of  September  in  the  year  afore- 
said, at,  etc.,  the  first  of  the  said  bills  came  to  the  sight  of, 
and  was  then  and  there  shown  to,  the  defendant,  yet  the 
defendant  not  regarding,  etc.,  but  contriving,  etc.,  did  not 
pay  the  said  £414  8s.  4f?.,  etc.,  at  the  end  of  the  thirty  days  ^ 
etc.,  whereby  the  defendant  lost  the  benefit  of  trading  with 
the  said  £414  8s.  4<:?.,  etc.,  to  his  damage  £600. 

In  this  declaration  it  will  be  perceived  that  the  custom  of 
merchants  is  not  alleged  as  the  foundation  of  the  action  or 
the  cause  of  liability  of  the  defendant.  Xor  is  it  stated 
that  the  defendant  accepted  the  bill.  But  the  plaintiff 
grounds  his  action  upon  the  defendant's  promise  to  pay  the 
amount  mentioned  in  the  bill,  in  consideration  of  1400 
crowns  paid  to  his  use  in  France,  and  in  consideration  that 
his  factor  had  drawn  and  delivered  the  bills  to  the  plain- 
tiff's factor.  This  idea  of  factorage  is  probably  a  fiction 
introduced  for  the  purpose  of  adapting  the  custom  of  mer- 
chants to  the  common-law  forms,  and  to  show  a  sufficient 
consideration  for  the  assumpsit.  The  question  of  factorage 
was  not  traversable.  .  .  .  This  fiction  might  perhaps  be  con- 
sidered as  part  of  the  custom  of  merchants ;  but  at  any  rate 
it  seems  to  have  been  considered  necessary  in  order  to  create 
that  degree  of  privity  between  the  payer  and  the  acceptor 
which  at  that  time  was  supposed  necessary  to  support  the 
action  of  assumpsit. 

But  this  and  the  former  are  declarations  at  common  law. 
.  .  .  They  show  also  that  if  privity  of  contract  was  neces- 
sary at  common  law  to  support  the  action  of  assumpsit,  the 
law  would  presume  a  privity,  or  ab  least  would  presume 

1  Observe  that  '  usance '  is  not  added.  It  seems  that  added  time  was 
really  (jrace ;  i.  e.,  indulgence  at  the  choice  of  the  holder. 


DUNLOP  V.  SILVER.  7 

facts  which  constituted  a  privity,  between  the  payee  and 
acceptor,  or  between  an  indorsee  and  a  drawer  of  a  bill  of 
exchange. 

[After  reviewing  later  precedents  before  the  statute  of 
Anne,  in  which  the  fictions  more  or  less  disappear,  it  is  stated 
that  in  these  later  forms  the  liability  of  defendant  under 
the  custom  was  thought  a  sufficient  consideration  to  raise 
an  assumpsit  without  averring  those  intermediate  steps 
which  might  be  regarded  as  the  links  of  the  chain  of  privity 
connecting  the  plaintiff  with  the  defendant.  The  reason  of 
this  change,  it  is  added,  was  probably  the  consideration  that 
those  intermediate  links  were  only  fictions  or  presumptions 
of  law,  which  were  never  necessary  to  be  stated.  All  the 
foregoing  related  to  foreign  bills.] 

[P.  380.]  It  is  not  ascertained  exactly  at  what  time 
inland  bills  first  came  into  use  in  England,  or  at  what 
period  they  were  first  considered  as  entitled  to  the  privi- 
leges of  bills  of  exchange  under  the  law  merchant.  But 
there  was  a  time  when  the  law  merchant  was  considered  as 
'confined  to  cases  where  one  of  the  parties  was  a  merchant 
stranger,'  3  Wooddeson,  109,  and  when  those  bills  of 
exchange  only  were  entitled  to  its  privileges  one  of  the 
parties  to  which  was  a  foreign  merchant.  ...  In  the  case 
of  Bromwich  v.  Loyd,  2  Lutw.  1585  (Hil.  8  Wm.III.  C.  B.), 
Chief  Justice  Treby  said  that  'bills  of  exchange  at  first 
were  extended  only  to  merchants  strangers  trading  with 
English  merchants;  and  afterwards  to  inland  bills  between 
merchants  trading  one  with  another  here  in  England;  and 
after  that  to  all  traders  and  dealers,  and  of  late  to  all 
persons  trading  or  not. '  .   .   . 

.  .  .  Kyd,  in  his  Treatise  on  Bills,  p.  13  (Dublin  edition, 
1791),  speaking  of  promissorij  notes,  says,  '  the  period  of 
their  introduction  appears  to  have  been  about  thirty  years 
before  the  reign  of  Queen  Anne;  '  but  the  only  authority 
he  cites  is  6  Mod.  30  (2  Anne),  the  case  of  Buller  v.  Crips 


8  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

...  in  which  Lord  Holt  says  he  had  consulted  two  of 
the  most  famous  merchants  in  London,  who  informed  him 
that  '  it  was  very  frequent  with  them  to  make  such  notes, 
and  that  they  looked  upon  them  as  bills  of  exchange,  and 
that  they  had  been  used  for  a  matter  of  thirty  years.' 
...  It  is  certain  that  promissory  notes  were  in  use  upon 
the  continent  in  those  commercial  cities  and  towns  with 
which  England  carried  on  the  greatest  trade  long  before 
that  period,  and  were  negotiable  under  the  custom  of  mer- 
chants in  the  countries  from  whence  England  adopted  the 
greater  part  of  her  commercial  law.  They  were  called 
bills  obligatory,  or  bills  of  debt,  and  are  described  with 
great  accuracy  by  Malynes,  in  his  Lex  Mercatoria,  pp.  71, 
72,  etc.,  where  he  gives  the  form  of  such  a  bill,  which  is 
copied  by  MoUoy  in  p.  447  (7th  edition,  London,  1722), 
and  will  be  found  in  substance  exactly  like  a  modern  prom- 
issory note.   .   .   . 

As  Malynes  says  nothing  of  inland  bills,  and  yet  is  so 
very  particular  respecting  promissory  notes,  the  probability 
is,  that  the  antiquity  of  the  latter  is  greater  than  that  of 
the  former,  and  that  they  were  more  certainly  within  the 
custom  of  merchants.   .   .   . 

[P.  384.]  The  time  when  inland  bills  and  promissory 
notes  began  to  be  in  general  use  in  England  was  probably 
about  the  year  1645  or  1646;  and  their  general  use  at  that 
time  may  be  accounted  for  by  the  facts  stated  in  Ander- 
son's  Hist,  of  Commerce,  vol.  1,  pp.  386,  402,  484,  492, 
493,  519,  and  520.  .  .  .  [Here  follow  quotations  from  the 
book  just  cited,  based  on  'a  scarce  and  most  curious  small 
pamphlet,  printed  in  1676,  entitled  "The  mystery  of  the 
new-fashioned  goldsmiths,  or  bankers,  discovered,"  in  eight 
quarto  pages.'     The  court  then  proceeds  :] 

[P.  386.]  This  short  history  of  the  goldsmiths  will 
account  for  the  sudden  increase  of  paper  credit  after  the 


DUNLOP  V.  SILVER.  9 

year  1645,  and  renders  it  extremely  probable  that  inland 
bills  and  promissory  notes  were  in  very  general  use  and 
circulation.  Indeed,  we  know  that  to  be  the  fact  from  the 
cases  in  the  books,  upon  examining  which  we  shall  find 
that  there  was  no  distinction  made  between  inland  bills  of 
exchange  and  promissory  notes;  they  were  both  called  bills; 
they  were  both  called  notes;  sometimes  they  were  called 

*  bills  or  notes.'     Neither  the  word  '  inland  '  nor  the  word 

*  promissory  '  was  at  that  time  in  use  as  applied  to  distin- 
guish  the  one  species  of  paper  from  the  other.  .  .  .  [The 
argument  proceeds  that  promissory  notes  were  witliin  the 
custom  of  merchants  before  the  statute  of  Anne.  Amonsr 
a  multitude  of  cases  the  following,  Carter  v.  Palmer,  12 
Mod.  380,  anno  1700,  is  quoted :] 

[P.  402,]  '  Palmer  had  given  a  note  under  his  hand  in 
this  form:  "I  promise  to  pay  the  bearer  so  much  money  on 
demand."  Plaintiff  brings  his  action,  grounding  it  upon  the 
custom  of  merchants,  as  if  it  were  a  bill  of  exchange,  and 
avers  no  consideration.  After  verdict,  upon  motion  in 
arrest  of  judgment,  Holt,  Chief  Justice:  "We  will  take 
such  a  note  prima  facie  for  evidence  of  money  lent;  and 
though  they  have  declared  on  the  custom,  yet  we  must  take 
care  that  by  such  a  drift  the  law  of  England  be  not 
changed,  by  making  all  notes  bills  of  exchange."  But  all 
■  seemed  to  agree  if  it  were  made  payable  to  him  or  order, 
the  defendant  by  that  form  had  made  it  negotiable,  and  by 
consequence  he  would  be  liable  to  the  action  of  assignee  in 
his  own  name;  for  if  a  man  who  is  no  merchant  will  draw 
a  bill  of  exchange,  he  is  suable  upon  it  according  to  the 
custom  of  merchants,  for  he  makes  himself  a  merchant 
pro  tanto.  And  inland  bills  were  not  known  till  trade  grew 
to  a  great  height;  and  when  they  obtained,  they  received 
the  same  law  with  outlandish  bills.   .   .   .  Et  adjorn.' 

[P.   408.]    But   let  us  proceed  to  examine  the  case  of 
Gierke  v.    Martin,  Pasch.  1  Anne,  B.  E.,  2  Ld.  Kaym. 


10  CASES   ON   BILLS,  NOTES,  AND  CHEQUES. 

757;  1  Salk.  129,  upon  which  alone  is  founded  the  asser- 
tion in  modern  books  that  before  the  statute  of  Anne 
promissory  notes  were  not  assignable  or  indorsable  over 
within  the  custom  of  merchants,  so  as  to  enable  the 
assignee  to  bring  an  action  in  his  own  name  against  the 
maker.  The  case  is  thus  reported  by  Lord  Raymond : 

'  The  plaintiff  brought  an  action  upon  his  case  .  .  .  ; 
one  count  was  upon  a  general  indebitatus  assumpsit  .  .  .  ; 
another  was  upon  the  custom  of  merchants  as  upon  a  bill 
of  exchange,  and  showed  that  the  defendant  gave  a  note 
...  by  which  he  promised  to  pay  to  the  plaintiff  or  his 
order,  etc.  .  .  .  And  it  was  moved  in  arrest  of  judgment 
that  this  note  was  not  a  bill  of  exchange  within  the  custom 
of  merchants,   .   .   . 

'  But  Holt,  Chief  Justice,  was  totis  viribus  against  the 
action,  and  said  that  this  could  not  be  a  bill  of  exchange; 
that  the  maintaining  of  these  actions  upon  such  notes  were 
innovations  upon  the  rules  of  the  common  law,  and  that  it 
amounted  to  a  new  sort  of  specialty  unknown  to  the  com- 
mon law,  and  invented  in  Lombard  street,  which  attempted, 
in  these  matters  of  bills  of  exchange,  to  give  laws  to 
Westminster  Hall.'  .   .   . 

[Judgment  in  that  case  was  given  for  the  defendant. 
Several  cases  followed,  the  last  case  before  the  statute  being 
Buller  V.  Crips,  6  Mod.  29  (Mich.  2  Anne,  1703),  a  suit 
by  an  indorsee  of  a  promissory  note  against  the  maker. 
Lord  Holt  took  the  same  view  he  had  taken  in  Clerke  v. 
Martin;  but  the  pressure  against  him  was  very  strong,  and 
he  now  said  that  he  desired  to  speak  with  two  of  the  most 
famous  merchants  in  London  '  of  the  mighty  ill  conse- 
quences that  was  pretended  would  ensue  '  from  adhering  to 
his  view  of  the  subject.  They  told  him  plainly  of  the 
custom ;  '  and  the  court  at  last  took  the  vacation  to  con- 
sider of  it.'  Pending  the  decision,  the  statute  of  Anne  was 
passed,  by  which  it  was  provided  that  '  notes  in  writing 
...  to  the  intent  to  encourage  trade  and  commerce,  which 


QUINBY   V.  MERRITT.  11 

will  be  much  advanced  if  such  notes  shall  have  the  same 
effect  as  inland  bills  of  exchange,  .  .  .  shall  be  assign- 
able or  indorsable  over  in  the  same  manner  as  inland  bills 
of  exchange  are  or  may  be  according  to  the  custom  of 
merchants.'  That  clearly  shows  that  inland  bills  had 
taken  their  place  in  the  general  law  of  England  before 
promissory  notes.  It  is  not  improbable,  however,  that  all 
of  these  instruments  had  been  enforced,  according  to  their 
tenor,  under  the  custom  of  merchants  in  the  '  Dusty-Foot ' 
(Pie-poudre)  courts  of  trade  until  in  the  17th  century, 
when  those  courts  began  to  disappear.  See  Scrutton, 
Mercantile  Law,  chap.  1,  2.] 


QUINBY  V.  MERRITT. 
Supreme  Court  of  Teuuessee,  December,  1850.     11  Humph.  439. 

A  written  promise  to  pay  a  sum  of  money  in  carpenter's  work  cannot 
be  a  promissory  note. 

An  undertaking  to  pay  A  or  B  is  not  according  to  the  law  merchant ; 
but  it  is  evidence  of  a  contract  to  pay  the  persons  named,  jointly. 

The  case  is  stated  in  the  opinion. 

ToTTEX,  J.,  for  the  court. — The  action  is  founded  on 
an  obligation  executed  by  defendant  to  Susan  Quinby,  on 
the  29th  October,  1842,  by  which  he  agreed  to  pay  to  Susan 
Quinby  one  hundred  and  forty  dollars  in  carpenter's  work, 
and  upon  said  obligation  are  the  following  indorsements, 
to  wit:  'Pay  the  within  to  the  order  of  C.  W.  or  W.  L. 
Nance,'  signed  'Susan  Quinby;'  '  I  assign  the  within  to 
Wm.  Warmouth,  without  recourse  on  me,  Oct.  14,  1846,' 
signed  '  C.  W.  Nance.' 

His  honor  the  judge  instructed  the  jury  '  that  if  the 
paper  in  suit  was  assigned  to  C.  W.  or  W.  L.  Nance,  the 
assignment  of  one  of  them  would  not  transfer  the  paper; 
but  if  both  had  assigned  it,  the  word  "or  "  would  be  con- 
strued "and,"  to  effectuate  the  intention  of  the  party.' 
The  verdict  was  of  course  for  the  defendant,  and  the  only 


12  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

question  is,  whether  there  was  error  in  the  instruction  to 
the  jury;  and  we  are  of  the  opinion  that  there  was  not. 

As  to  the  character  of  the  instrument,  we  may  observe 
that  it  is  not  a  negotiable  paper  in  the  sense  of  the  law 
merchant;  though  by  statute  (1801,  ch.  6,  §  54)  such  a 
contract  is  assignable  so  as  to  transfer  the  legal  interest 
and  to  enable  the  assignee  to  sue  in  his  own  name.  White- 
man  V.  Childress,  6  Humph.  309. 

The  case  of  Willoughby  v.  Willdughby,  5  X.  H.  254, 
was  an  action  by  one  of  the  payees  on  a  note  payable  to 
Washington  or  Joseph  Willoughby,  and  the  court  was  of 
opinion  that  the  note  was  evidence  of  a  contract  with  both 
the  payees  jointly;  that '  or  '  in  the  note  must  be  understood 
to  mean  'and; '  and  therefore  that  one  of  the  payees  could 
not  maintain  the  suit  without  joining  the  other. 

In  Blanckenhagen  v.  Blundell,  2  Barn.  &  A.,  and  Wal- 
rad  V.  Petrie,  4  Wend.  575,  the  notes  were  made  payable  to 
two  persons  in  the  disjunctive,  and  a  similar  view  of  the 
subject  was  taken.  But  these  cases  are  principally  to  the 
point  that  such  a  note  is  not  valid  as  a  promissory  note, 
because  of  the  uncertainty  of  the  person  entitled  to  the 
payment;  and  certainly  that  is  to  be  taken  as  the  settled 
doctrine  as  to  promissory  notes,  made  negotiable,  as  under 
the  law  merchant.     Story  on  Prom.  ISTotes,  §  33. 

The  case  of  Ellis  v.  McLemood,  1  Baily,  S.  C.  13,  main- 
tains a  different  rule,  and  decides  that  one  of  the  payees 
of  a  note  may  alone  maintain  the  action,  because  it  is 
made  payable  to  either.  This  case  must  be  considered  as 
standing  opposed  to  the  weight  of  authority  on  this  sub- 
ject, and  we  are  by  no  means  satisfied  with  the  principle  it 
holds  or  the  reasoning  employed  to  maintain  it.^ 

Although  such  paper  be  not  valid  as  a  promissory  note, 
yet  it  is  evidence  of  a  contract  for  the  payment  of  money, 
and,  according  to  the  cases  referred  to,  and  especially  that 
in  5  N.  H.,  it  is  evidence  with  both  the  payees  jointl}-; 

1  See  Osgood  v:  Pearsons,  4  Gray,  455;  Bills  and  Notes  (Students' 
series),  14. 


QUINBY   V.  MERRITT.  13 

and  they  have  therefore  a  joint  interest  in  the  fund  secured 
by  such  note. 

If  this  view  of  the  subject  be  not  correct,  then  the  note 
or  other  contract  so  made  payable  to  two  or  more  in  the 
disjunctive  should  be  taken  as  void  for  uncertainty,  as 
we  do  not  see  that  any  one  of  the  payees  can  have  a  better 
claim  than  another  to  sue  upon  the  note  or  contract,  or 
demand  its  payment.  It  is  true  that  a  payment  to  any 
one  of  them  would  be  a  discharge  of  the  contract;  but  that 
is  also  true  when  the  note  or  contract  is  made  payable  to 
two  or  more  persons  jointly;  a  payment  to  one  is  a  pay- 
ment to  all,  although  they  have  a  joint  interest  in  the  fund. 

We  think  it  more  conformable  to  reason  as  well  as 
authority  to  hold  such  a  contract  as  valid,  and  as  con- 
ferring a  joint  interest  on  the  persons  with  whom  it  is 
made,  and  who  are  entitled  to  its  proceeds.  Xow  to 
apply  this  principle  to  the  present  case,  the  assignment 
to  'C.  W.  or  W.  L.  Nance '  will  be  construed  as  conferring 
upon  them  not  a  separate  but  a  joint  interest  in  the  con- 
tract, that  being  the  intention  as  well  as  legal  effect;  and  as 
only  one  of  them  has  assigned  to  the  plaintiff,  it  follows 
that  the  plaintiff  is  not  invested  with  the  legal  title  to 
the  contract,  and  therefore  cannot  maintain  an  action 
upon  it.  It  certainly  was  competent  for  him,  as  the 
owner  of  this  obligation,  to  strike  out  the  assignments, 
they  being  imperfect,  and  to  sue  in  the  name  of  the  payee 
for  his  use  ;  but  as  he  relies  upon  the  assignments,  and 
they  do  not  transfer  the  legal  title,  the  present  action 
cannot  be  maintained.     Let  the  judgment  be 

Affirmed. 


14  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

ADAMS   V.  KING. 

Supreme  Court  of  Illinois,  December,  ISoi.     16  111.  169. 

A  promissory  note  may  be  payable  to  'the  administrators  of  A  C, 
deceased.' 

Demurrer  to  a  declaration  overruled. 

ScATES,  J.,  for  the  court.  —  The  error  assigned  is  for 
overruling  a  demurrer  to  the  declaration.  It  was  in 
assumpsit,  and  contained  two  counts;  each  upon  a  promis- 
sory note  made  by  plaintiffs  in  error  to  '  the  administra- 
tors of  Abner  Cliase,  deceased,'  for  $40U,  with  six  per 
cent  interest  from  date,  for  value  received,  dated  7th 
March,  1853,  one  payable  in  six  and  the  other  in  twelve 
months.  The  declaration  further  avers  that  defendants 
were  the  administrators  of  Abner  Chase  on  the  7th  jMarch, 
1853,  with  profert  of  the  letters  of  administration,  dated 
19th  December,  1851,  and  that  the  notes  were  executed,  de- 
livered, and  made  payable  to  the  defendants  by  the  name 
and  style  of  the  '  administrators  of  Abner  Chase,  deceased.' 

The  objections  taken  are,  that  this  is  not  a  promissory 
note;  that  there  is  no  payee,  or  that  the  payee  is  uncer- 
tain; or  if  there  be  a  payee,  it  is  a  promise  to  defendants 
in  their  representative  character,  and  they  should  sue  as 
administrators. 

We  do  not  assent  to  either  objection.  The  general  rule 
in  relation  to  bills  of  exchange  and  promissory  notes 
requires  that  the  person  to  whom  they  are  made  payable 
shall  be  specified.  Chit,  on  Bills,  156.  But  this  may  be 
done  without  inserting  the  name;  for  that  is  certain  which 
may  be  rendered  certain;  and  if  the  payee  be  so  certainly 
described  or  referred  to  as  to  be  easily  ascertained  by  alle- 
gations and  proofs,  the  promise  will  be  valid.  The  decla- 
ration avers  that  plaintiffs  were  '  administrators  of  Abner 
Chase,  deceased'  at  the  time  these  promises  were  made,  and 
that  they  were  made  to  them  personally  by  that  designa- 


SPERRY   V.  HORR.  l5 

tion  and  description.  These  are  traversable  allegations, 
and  must  be  denied  under  oath,  by  our  statute,  as  settled 
in  Frye  v.  IMenkius,  lo  111.  339.  The  same  rule  was 
applied  in  ascertaining  the  promisors .  in  Dwight  v. 
"Newell,  15  111.  333.  They  have  not  sued  as  administra- 
tors, and  it  was  therefore  unnecessary  to  aver  that  they 
were  administrators  at  the  time  this  action  was  commenced. 
The  demurrer  admits  the  promise  to  be  to  defendants  per- 
sonally, by  a  descriptive  phraseology. 

The  case  referred  to  in  Breese,  2,  was  ruled  upon  the 
ground  that  there  was  no  payee,  and  that  in  Breese,  155, 
was  upon  the  same  ground.  The  case  of  Berry  v.  Hawly, 
1  Scam.  468,  was  put  upon  the  ground  of  a  Avant  of  j^ower, 
in  a  county  treasurer,  to  take  under  such  a  promise. 

The  cases  in  15  111.  are  decisive  of  this,  in  principle. 
The  judgment  must  therefore  be 

Affirmed. 


SPEREY  V.    HORR. 

Supreme  Court  of  Iowa,  June,  1S71.     32  Iowa,  184. 

A  stipulation  for  the  payment  of  'collection  and  attorney  fees '  added  to 
a  promissory  note  will  not  destroy  the  instrument  as  a  promissory  note. 

Action  as  by  indorsee  against  maker  upon  unstamped 
instruments  by  which  the  maker  promised  to  pay  A.  S. 
Jones  &  Co.,  or  bearer,  a  certain  sum  of  money  at  a  certain 
time,  adding:  *  If  not  paid  when  due,  and  suit  is  brought 
thereon,  I  hereby  agree  to  pay  collection  and  attorney  fees 
therefor.'  Defence,  fraud,  want  of  consideration,  etc., 
and  that  the  instruments  were  not  stamped.  It  was  also 
objected  that  the  words  quoted  destroyed  the  negotiability 
of  the  promise.  Judgment  for  plaintiff,  without  '  collec- 
tion and  attorney  fees, '     Appeal  by  defendant. 

Beck,  J.,  for  the  court.  — The  question  raised  by  appel- 
lant relates  to  the  sufficiency  of  the  instruments  sued  upon 


16  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

as  promissory  notes,  and  the  defence  pleaded  that  they 
were  not  stamped  by  defendant.  If  the  instruments  are 
non-negotiable,  tlie  facts  found  by  the  court  are  sufficient 
to  defeat  recovery  in  this  action;  if  negotiable,  the  judg- 
ment of  the  District  Court,  so  far  as  the  defence  of  fraud, 
want  of  consideration,  etc.,  are  concerned,  must  be  sus- 
tained. We  are  required  therefore  to  determine  whether 
the  instruments  are  promissory  notes.  It  is  claimed  that 
they  are  not  for  the  payment  of  a  certain  sum  of  money ; 
the  agreement  obligating  the  maker  to  pay  collection  and 
attorney  fees,  it  is  insisted,  renders  the  amount  payable 
uncertain,  and  thereby  destroys  their  character  as  negoti- 
able paper. 

The  rule  that  to  constitute  a  negotiable  promissory  note 
there  must  be  entire  certainty  and  precision  as  to  the 
amount  of  money  to  be  paid  is  fully  admitted,  and  under- 
stood to  be  inflexible.  But  in  our  opinion  the  instruments 
which  are  the  foundation  of  this  suit  are,  within  the 
meaning  of  this  rule,  for  the  payment  of  a  certain  and 
precise  sum,  and  are  therefore  to  be  considered  promissory 
notes. 

The  sums  payable  by  the  terms  of  the  notes  are  fixed  and 
certain;  they  are  subject  to  no  increase  or  diminution. 
When  they  matured,  no  inquiry  was  necessary  to  be  made 
as  to  facts  not  apparent  in  the  face  of  the  notes  in  order  to 
fix  the  amount  due;  recovery  could  have  been  had  upon 
the  notes  themselves  without  other  evidence.  The  agree- 
ment for  the  payment  of  attorney  fees  in  no  sense  in- 
creased the  amount  of  money  which  was  payable  when  the 
notes  fell  due,  and  we  are  unable  to  see  that  it  rendered 
that  amount  uncertain  in  the  least  degree.  It  simply 
imposed  an  additional  liability  in  case  suit  should  be 
brought,  and  such  liability  did  not  become  absolute  until 
an  action  was  instituted.  This  agreement  relates  rather 
to  the  remedy  upon  the  note,  if  a  legal  remedy  be  pursued, 
to  enforce  its  collection,  than  to  the  sum  which  the  maker 


SPERRY   V.  HORR.  17 

is  bound  to  pay.^  It  is  not  different  in  its  character  from 
a  cognovit,  which  when  attached  to  promissory  notes  does 
not  destroy  their  negotiability.  In  our  opinion,  therefore, 
the  court  was  correct  in  hokling  that  the  instruments  sued 
on  are  negotiable  and  not  within  the  operation  of  the  rule 
above  stated.  This  conclusion  is,  we  believe,  supported 
by  prior  decisions  of  this  court.  Jewett  v.  Lyon,  3  Greene, 
577;  Knipper  v.  Chase,  7  Iowa,  147;  Green  v.  Austin, 
id.  522. 

Many  authorities  hold  that  an  agreement  incorporated 
in  the  body  of  a  note,  binding  the  maker  to  pay,  in  addi- 
tion to  the  amount  named,  exchange  thereon,  does  not 
under  the  rule  just  considered  destroy  the  negotiable 
character  of  the  instrument.  Johnson  v.  Frisbie,  15 
Mich.  286;  Smith  v.  Kendall,  9  id.  241;  Leggett  v.  Jones, 
10  Wis.  35;  Grutacap  v.  Woullouise,  2  McLean,  581. 

Under  the  principles  of  these  decisions  there  is  no  diffi- 
culty in  holding  the  paper  in  question  to  be  negotiable. 
The  exchange  provided  for  by  the  notes  in  these  cases  may 
be  considered,  however,  as  part  of  the  sum  due,  the  amount 
to  be  paid.  But  in  the  case  at  bar,  as  we  have  seen,  the 
attorney's  fees  are  not  part  of  the  sums  due  on  the  notes, 
but  an  amount  for  which  the  maker  may  become  liable 
when  a  legal  remedy  is  enforced  against  him.  There  are 
other  cases,  probably  equal  in  number  and  authority  to 
those  last  cited,  holding  a  contrary  doctrine.  See  1 
Parsons  on  Bills  and  Notes,  38;  Lowe  v.  Bliss,  24  111. 
168;  Eead  v.  McNulty,  12  Rich.  (Law),  445.  Without 
weighing  these  conflicting  authorities,  we  are  of  the  opinion 
that  the  judgment  of  the  District  Court  ought  to  be 
affirmed  upon  the  ground  first  stated.  ...  [A  point  about 
stamping.] 

1  This  may  be  doubted,  without  impeaching  the  soundness  of  the  rest 
of  the  reasoning. 

2 


18  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

MATTISOX  V.  MARKS. 

Supreme  Court  of  ISIichigan,  April,  1875.     31  Mich.  421. 

A  promissory  note  may  be  made  payable  '  on  or  before '  a  day  named. 

Suit  on  a  written  promise  to  pay  a  sum  of  money  '  on 
or  before  '  a  day  named. 

CooLET,  J.,  for  the  court.  — .  .  .  [A  question  of  pay- 
ment here  considered,  the  ruling  of  the  lower  court  being 
held  erroneous]. 

This  view  will  dispose  of  the  case,  unless  the  defendant 
is  correct  in  the  position  he  takes,  that  the  paper  sued 
upon  is  not  a  promissory  note.  ]f  it  is  not,  the  suit  must 
fail,  because  the  declaration  has  treated  it  as  such,  and  is 
not  adapted  to  the  case  of  any  other  special  contract.  The 
objection  to  this  instrument  is,  that  it  promises  to  pay  a 
certain  sum  of  money 'on  or  before'  a  day  named;  and 
this,  it  is  said,  is  not  a  promise  to  pay  on  a  day  certain, 
and  consequently  cannot  be  a  promissory  note.  We  are 
referred  to  Hubbard  v.  Mosely,  11  Gray,  170,  in  support 
of  this  view.  That  case  certainly  seems  to  support  the 
position  of  defendant,  and  it  is  to  be  regretted  perhaps 
that  the  learned  judge  wlio  delivered  the  opinion  did  not 
deem  it  important  to  present  more  fully  the  reasons  that 
led  him  to  his  conclusions,  instead  of  contenting  himself 
Avith  a  simple  reference  to  the  general  doctrine  that  a 
promissory  note  must  be  payable  at  a  time  certain.  It 
seems  to  us  that  this  note  is  payable  at  a  time  certain.  It 
.  is  payable  certainly,  and  at  all  events,  on  a  day  particularly 
named;  and  at  that  time,  and  not  before,  payment  might 
be  enforced  against  the  maker.  It  is  impossible  to  say 
that  this  paper  makes  the  payment  subject  to  any  contin- 
gency or  puts  it  upon  any  condition.  The  legal  rights  of 
the  holder  are  clear  and  certain;  the  note  is  due  at  a  time 
fixed,  and  it  is  not  due  before.  True,  the  maker  may  pay 
sooner  if  he  shall  choose;  but  this  option,  if  exercised, 


WORDEN  V.  DODGE.  19 

would  be  a  payment  in  advance  of  the  legal  liability  to 
pay,  and  nothing  more.  Notes  like  this  are  common  in 
commercial  transactions,  and  we  are  not  aware  that  their 
negotiable  quality  is  ever  questioned  in  business  dealings. 
It  ought  not  to  be  questioned  for  the  sake  of  any  distinc- 
tion that  does  not  rest  upon  sound  reason,  and  we  can 
discover  no  sound  reason  for  the  distinction  here  insisted 
upon. 

The  judgment  must  be  Reversed. 

But  see  Stults  o.  Silva,  119  Mass.  137,  cited  with  other  cases  in 
Bills  and  Notes  (Students'  series),  18,  24. 


WORDEN  V.    DODGE. 

Supreme  Court  of  New  York,  January,  1847.     4  Denio,  159. 

An  instrument  by  which  a  party  promises  to  pay  a  certain  sum  at  a 
stated  time  out  of  the  net  proceeds  of  ore  to  be  raised  aud  sold  from  a 
certain  ore  bed,  is  not  a  promissory  uote. 

Assumpsit  upon  a  written  instrument  in  the  form  of  a 
promissory  note,  except  that  it  was  payable  '  out  of  the 
net  proceeds  after  paying  the  costs  and  expenses  of  ore  to 
be  raised  and  sold  from  the  bed  in  the  lot  this  day  con- 
veyed by  Edward  Maiden  to  Edwin  Dodge,  which  bed  is 
to  be  opened,  and  the  ore  disposed  of  as  soon  as  conve- 
niently may  be.'  The  plaintiff,  who  was  the  payee,  was 
nonsuited,  because  he  offered  no  evidence  that  sufficient 
ore  had  been  obtained  from  the  mine  or  that  the  defend- 
ants had  been  negligent  in  the  matter  Motion  for  a  new 
trial. 

Beardsley,  J.,  for  the  court.  — The  nonsuit  was  proper. 
A  promissory  note  must  be  payable  absolutely,  and  not 
upon  any  contingency  as  to  time  or  event.  3  Kent,  oth 
ed.  p.   74 ;    Smith   on   Merc.    Law,    113,    116  ;    Story   on 


20  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

Prom.   Notes,  §§  1,  22-26;  id.  on  Bills  of  Exch.  §§  46,  47; 
Chit,  on  Bills,  10th  Am.  ed.  pp.  132-139. 

This  was  not  such  an  engagement,  for  although  the 
promise  was  to  make  payments  at  certain  specified  times, 
the  payments  were  to  be  made  *  out  of  the  net  proceeds  ' 
'of  ore  to  be  raised  and  sold  '  from  a  certain  ore  bed.  Here 
was  a  contingency;  the  fund  might  turn  out  to  be  inade- 
quate, in  which  case  there  would  be  no  obligation  to  pay 
at  any  time.  It  was  not  a  promise  to  pay  '  absolutely  and 
at  all  events, '  as  a  promissory  note  always  is. 

New  trial  denied. 


KELLEY   V.    HEMMINGWAY. 
Supreme  Court  of  Illinois,  Juue,  1852.     13  111.  604. 

A  writing  promising  to  pay  a  certain  sum  when  A  shall  arrive  at  age 
is  not  a  promissory  note ;  and  it  does  not  alter  the  case  that  A  actually 
lives  to  attain  his  majority. 

The  case  is  stated  in  the  opinion  of  the  court. 

Treat,  C.  J.,  for  the  court.  — This  was  an  action  brought 
by  Hemmingway  against  Kelley  before  a  justice  of  the 
peace,  and  taken  by  appeal  to  the  Circuit  Court.  On  the 
trial  in  the  latter  court,  the  plaintiff  offered  in  evidence 
an  instrument  in  these  words :  — 

'  Castleton,  April  27,  1844. 
'  Due  Henry  D.  Kelley,   fifty-three  dollars  when  he  is 
twenty-one  years  old,  with  interest.         David  Kelley.' 

On  the  back  of  which  was  this  indorsement:  — 

'  KocKTON,  May  21,  1849. 
*  Signed  the  within,   payable  to   Moses   Hemmingway. 

Henry  Kelley.' 

The  plaintiff  proved  that  the  payee  became  of  age  in 
August,  1849.     The  defendant  objected  to  the  introduction 


KELLEY  I'.  HEMMINGWAY.  21 

of  the  instrument,  because  it  was  not  negotiable,  but  the 
court  admitted  it  in  evidence,  and  rendered  judgment  for 
the  plaintiff. 

Our  statute  makes  promissory  notes  assignable  by  indorse- 
ment in  writing,  so  as  absolutely  to  vest  the  legal  interest 
in  the  assignee.  Was  the  instrument  in  question  a  prom- 
issory note?  To  constitute  a  promissory  note,  the  money 
must  be  certainly  payable,  not  dependent  on  any  contin- 
gency, either  as  to  event,  or  the  fund  out  of  which  payment 
is  to  be  made,  or  the  parties  by  or  to  whom  payment  is 
to  be  made.  If  the  terms  of  an  instrument  leave  it  uncer- 
tain whether  the  money  will  ever  become  payable,  it  cannot 
be  considered  as  a  promissory  note.  Chit,  on  Bills,  134. 
Thus,  a  promise  in  writing  to  pay  a  sum  of  money  when 
a  particular  person  shall  be  married,  is  not  a  promissory 
note,  because  it  is  not  certain  that  he  will  ever  be  mar- 
ried. Pearson  v.  Garret,  4  Mod.  242;  Beardsley  v.  Bald- 
win, 2  Strange,  1151.  So  of  a  promise  to  pay  when  a 
particular  ship  shall  return  from  sea,  for  it  is  not  certain 
that  she  will  ever  return.  Palmer  v.  Pratt,  2  Bing.  185; 
Coolidge  V.  Ruggles,  15  Mass.  387.  In  all  such  cases, 
the  promise  is  to  pay  on  a  contingency  that  may  never 
happen.  But  if  the  event  on  which  the  money  is  to 
become  payable  must  inevitably  take  place,  it  is  a  matter 
of  no  importance  how  long  the  payment  may  be  suspended 
A  promise  to  pay  a  sum  of  money  on  the  death  of  a 
particular  individual  is  a  good  promissory  note,  for  the 
event  on  which  the  payment  is  made  to  depend  will  cer- 
tainly transpire.  Colehan  v.  Cooke,  Willes,  393;  s.  c.  2 
Strange,  1217. 

In  this  case,  the  payment  was  to  be  made  when  the  payee 
should  attain  his  majority,  —  an  event  that  might  or  might 
not  take  place.  The  contingency  might  never  happen,  and 
therefore  the  money  was  not  certainly  and  at  all  events 
payable.  The  instrument  lacked  one  of  the  essential  ingre- 
dients of  a  promissory  note,  and  consequently  was  not 
negotiable   under  the  statute.     The  fact  that  the   payee 


22  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

lived  till  he  was  twenty-one  years  of  age  makes  no  differ- 
ence. It  was  not  a  promissory  note  when  made,  and  it 
could  not  become  such  by  matter  ex  post  facto.  The 
plaintiff  has  not  the  legal  title  to  the  instrument.  If  it 
presents  a  cause  of  action  against  the  maker,  the  suit  must 
be  brought  in  the  name  of  the  payee.  The  case  of  Goss 
V.  Nelson,  1  Burr.  226,  is  clearly  distinguishable  from 
the  present.  There  the  note  was  made  payable  to  an 
infant  when  he  should  arrive  at  age,  and  the  day  when 
that  was  to  be  was  specified.  The  court  held  the  instru- 
ment to  be  a  good  promissory  note,  but  expressly  on  the 
ground  that  the  money  was  at  all  events  payable  on  the 
day  named,  whether  the  payee  should  live  till  that  time 
or  die  in  the  interim;  and  it  was  distinctly  intimated 
that  the  case  would  be  very  different  had  the  day  not  been 
stated  in  the  note.  It  was  regarded  as  an  absolute  promise 
to  pay  on  the  day  specified,  and  no  effect  was  given  to  the 
words  that  the  payee  would  then  become  of  age. 

The  judgment  must  be  Reversed. 


HASKELL  V.    LAMBERT. 

Supreme  Court  of  Massachusetts,  November,  I860.-    16  Gray,  592. 

A  provision  following  the  language  of  a  promissory  note,  that  the  in- 
strument is  '  to  be  held  as  collateral  security  for  the  payment '  of  other 
obligations,  destroys  the  instrument  as  a  promissory  note. 

Contract  by  the  plaintiff  as  indorsee  against  the  defend- 
ant as  second  indorser  of  the  following  instrument:  — 

'  Boston,  January  4th,  1850.  Six  months  after  date  I 
promise  to  pay  to  the  order  of  myself  twenty-four  hundred 
dollars,  value  received,  to  be  held  as  collateral  security 
for  the  payment  of  E.  Boynton's  note,  December  5th,  6 
months  for  $968.41;  P.  E.  Webster's  note,  September  7th, 
6  months  for  $257.72,  and  his  acceptance,  December  11th, 


HASKELL   V.  LAMBERT.  23 

6  months  for  f  178.10;  M.  Bartlett  &  Go's  note,  May  7th, 
6  months  for  $435.40;  Wni.  M.  Jackson's  note,  Xovem- 
ber  5th,  6  months  for  $562.59.  George  Lambert.' 

No  objection  was  made  in  the  answer  to  the  form  of  the 
note;  but  at  the  trial  in  the  Superior  Court  of  Suffolk  at 
May  term,  1859,  Morton,  J.,  ruled  that  if  all  the  facts 
necessary  to  make  out  his  case  were  proved,  the  plaintiff 
could  not  maintain  this  action,  because  the  instrument 
declared  on  was  not  a  negotiable  promissory  note.  Verdict 
for  the  defendant;  the  plaintiff  alleged  exceptions. 

BiGELOw,  C.  J.,  for  the  court.  — The  contract  declared 
on  is  in  legal  effect  a  promise  to  pay  a  sum  of  money  in  six 
months  after  its  date  if  certain  debts  enumerated  in  it  are 
not  paid  by  the  persons  liable  therefor.  It  is  therefore 
not  an  absolute  promise  to  pay  money  at  all  events,  but 
only  upon  a  contingency.  Nor  is  it  certain  as  to  the  sum 
which  will  be  payable  at  its  maturity.  Being  given  as 
collateral  security  for  certain  specified  debts,  for  which 
different  persons  are  liable,  the  payment  of  any  portion  of 
such  debts  will  reduce  the  amount  pro  tanto  for  v/hich 
the  defendant  can  be  held  upon  his  promise.  It  is  there- 
fore an  agreement  to  pay  the  whole  sum  in  a  certain  con- 
tingency, or  such  part  thereof  as  may  not  be  paid  by  cer- 
tain other  persons.  In  these  particulars  it  lacks  the  essen- 
tial qualities  of  a  promissory  note.  It  is  a  contingent 
promise,  and  the  sum  which  will  be  due  upon  it  at  the 
expiration  of  six  months  is  uncertain.  A  promise  to  pay 
money,  not  certain  as  to  amount,  and  contingent  upon  a 
future  event,  is  not  regarded  as  negotiable,  because  it 
carries  with  it  on  its  face  notice  of  the  contingency  or 
uncertainty,  and  the  holder  or  assignee  must  be  bound  by 
the  stipulation,  and  must  take  it  subject  to  all  the  equi- 
ties. Although  he  may  have  paid  full  value  for  it,  he 
cannot  enforce  it  except  on  the  prescribed  contingency  or 
for  the  amount  which  may  at  its  maturity  turn  out  to  be 
due.     Besides,  it  would  essentially  infringe  on  an  estab- 


24  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

lislied  and  salutary  rule  of  law  to  hold  a  conditional  or 
contingent  promise  to  pay  money  valid,  without  requiring 
proof  of  consideration.  The  case  at  bar  is  very  similar  to 
Robins  v.  May,  11  Ad.  &  El.  213,  and  3  P.  &  Dav.  147. 
See  also  Byles  on  Bills  (6th  ed.),  71;  Cota  v.  Buck,  7  Met. 
589. 

The  contract  not  being  negotiable,  and  there  being  no 
proof  of  any  express  promise  by  the  defendant  to  pay  to 
the  plaintiff  the  amount  of  the  note  or  any  part  of  it,  it 
is  clear  that  the  present  action  cannot  be  maintained,  and 
that  no  amendment  of  the  declaration  can  be  made  under 
which  the  plaintiff  would  be  entitled  to  recover. 

Exceptions  overruled. 


WORKS   V.    HERSHEY. 

Supreme  Court  of  Iowa,  December,  1872.     35  Iowa,  340. 

A  promise  to  pay  a  certain  sum  of  money  '  on  demand  after  date  .  .  . 
when  couvenieut '  is  a  promissory  note. 

On  demurrer  to  answer. 

Beck,  C.  J.,  for  the  court.  — The  promissory  note  which 
is  the  foundation  of  this  action  is  in  these  words : 

'Cincinnati,  Eeb.  6,  1864. 
'  $2,512.84. 

'  On  demand  after  date  T  promise  to  pay  to  the  order  of 
Niles  Works  twenty-five  hundred  and  twelve  -f^-^  dollars, 
payable  at  Cincinnati  when  convenient.         B.  Hershey.' 

So  far  as  the  answer  relies  upon  the  peculiar  phrase- 
ology of  the  note  sued  on,  it  was  subject  to  the  demurrer. 
The  words  '  payable  at  Cincinnati  when  convenient ' 
cannot  be  construed  to  nullify  the  other  words  of  the 
instrument,  viz.  ^  on  demand  I  promise  to  pay.'  If  any 
force  be  given  to  them  it  will  be  that  the  maker  bound 


SHOE  AND  LEATHER  NATIONAL  BANK  v.   DIX.    25 

himself  to  pay  within  a  reasonable  time  after  the  date  of 
the  note.  Eamot  v.  Schotenfels,  15  Iowa,  457.  There 
is  no  claim  in  the  answer  that  a  reasonable  time  had  not 
been  given  defendant,  after  the  execution  of  the  note,  for  its 
payment. 


TAYLOR  V.    DOBBINS. 

King's  Bench  of  England,  Pasch.  6  Geo.  I.     1  Strange,  399. 

Signature  of  a  promissory  need  not  be  at  the  end. 

In  case  upon  a  promissory  note  the  declaration  ran,  that 
the  defendant  made  a  note  '  et  manu  sua  propria  scripsit. ' 
Exception  was  taken  that  since  the  statute  [of  Anne]  he 
should  have  said  that  the  defendant  signed  the  note;  but 
the  court  held  it  well  enough,  because  alleged  to  be  wrote 
with  his  own  hand,  and  there  needs  no  subscription  in  that 
case,  for  it  is  sufficient  his  name  is  in  any  part  of  it.  '  I, 
J  S,  promise  to  pay,'  is  as  good  as  'I  promise  to  pay,'  sub- 
scribed '  J  S.' 

In  Elliot  v.  Cowper,  1  Strange,  609,  it  was  held  that  the  words 
'  fecit  [the  defendant]  quandam  notam  in  scriptis  per  quam  pro- 
misit  solvere,'  imported  that  the  note  was  signed  or  written  by  the 
defendant. 

SHOE   &  LEATHER  NATIONAL   BANK    v.    DIX. 
Supreme  Court  of  Massachusetts,  September,  1877.    123  Mass.  148. 

Exempting  oneself  from  personal  liability,  in  terms,  on  the  face  of  a 
promise  to  pay  in  a  particular  character,  is  valid. 

Contract.  The  defendants  made  the  folloAving  prom- 
issory note,  which  was  indorsed  by  the  payees  to  the 
plaintiff :  — 

'February  16,  1871,  ^53,000.  For  value  received,  we  as 
trustees  but  not  individually  promise  to  pa}^  to  the  Boston 
Water  Power  Company  or   order   the   sum   of   fifty-three 


26  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

thousand  dollars  in  five  years  from  this  date,  with  interest 
to  be  paid  semi-annually,  at  the  rate  of  seven  per  centum 
per  annum,  during  said  term,  and  for  such  further  time  as 
said  principal  sum  or  any  part  thereof  shall  remain  unpaid. 

'Signed  in  presence  of         GEORGE  P.  SANGER,) 

P.  H.  SEARS.  JOSEPH   DIX,  C  Trustees.' 

R.  A.  BALLOU,  ) 

'  Secured  by  mortgage  of  real  estate  in  Boston, '  by  the 
defendants. 

The  question,  raised  on  agreed  facts  which  need  not  be 
stated  here,  was  whether  this  promissory  note  bound  the 
makers  personally. 

Ames,  J.,  for  the  court. — The  question  whether  the 
defendants  have  made  themselves  personally  responsible 
must  be  determined  by  the  terms  of  the  note  itself.  In 
determining  the  proper  interpretation  of  any  written  con- 
tract the  court  will  give  full  effect  to  all  the  terms  in  which 
it  is  expressed.  Those  terms  will  not  be  modified  by 
extrinsic  evidence  tending  to  show  that  the  real  intention 
of  the  parties  was  something  different  from  what  the  lan- 
guage imports.  They  will  be  taken  in  their  plain,  ordinary, 
and  popular  sense,  except  where  it  may  be  qualified  by  some 
special  usage,  or  where  the  context  evidentl}'  shows  that 
the  parties  in  some  particular  case  had  a  different  intent. 
It  is  no  part  of  the  business  of  the  court  to  make  or  alter 
a  contract  for  the  parties.  Even  if  it  be  found  that  the 
contract,  according  to  its  true  meaning,  has  no  legal 
validity,  or  fails  to  become  operative,  it  is  not  for  the 
court,  in  order  to  give  it  operation,  to  suppose  a  meaning 
which  the  parties  have  not  expressed,  and  which  it  is 
certain  they  did  not  entertain.  It  must  be  assumed  that 
all  the  language  used  in  the  contract  was  selected  with 
some  purpose  and  is  to  be  of  some  effect.  If  a  party, 
therefore,  in  a  contract  into  which  he  voluntarily  enters, 
and  not   in   the   execution   of  any  official  trust  or   duty, 


SHOE  AND  LEATHER  NATIONAL  BANK  v.  BIX.       27 

makes  it  an  express  stipulation  that  he  is  acting  for  some- 
body else,  and  is  in  no  event  to  be  personalh'  liable,  he 
certainly  cannot  be  rendered  so  by  law.  Sedgwick,  J., 
in  Sumner  v.  Williams,  8  Mass.  162,  184.  In  a  question 
as  to  the  meaning  of  a  contract  the  want  of  apt  words  to 
create  a  personal  liability  is  not  to  be  sujiplied  by  the 
alteration  or  enlargement  of  its  terms. 

In  applying  these  familiar  and  elementary  rules  of  con- 
struction to  the  case  now  before  us  we  find  that  the  defend- 
ants promised  '  as  trustees  but  not  individually.'  The 
construction  contended  for  by  the  plaintiffs  would  require 
us  to  strike  out  the  words  '  but  not  individuall}'; '  although 
in  so  doing  we  should  not  only  alter  the  contract,  but 
should  impose  upon  them  a  liability  which  apparently 
they  took  special  pains  to  avoid. 

It  is  to  be  borne  in  mind  that  this  was  not  a  case  of 
agents  acting  for  an  undisclosed  or  unknown  principal, 
and  is  therefore  readily  distinguishable  from  Winsor  v. 
Griggs,  5  Cush.  210,  and  cases  of  that  class.  Neither  Avas 
it  an  attempt  by  the  defendants  to  bind  projjerty  over 
which  they  had  no  legal  control.  By  the  tei-nis  of  the  deed 
they  had  power  to  mortgage,  lease,  and  manage  the  property 
at  their  discretion,  but  for  the  benefit  and  on  the  account 
of  the  equitable  owners,  namely,  the  members  of  the 
Brookline  Avenue  Association,  In  this  respect  the  case 
differs  from  Thacher  v.  Dinsmore,  5  Mass.  299,  Foster  v. 
Fuller,  6  Mass.  58,  and  other  cases  of  that  class,  in  which 
a  party  promising  '  as  guardian,'  etc.,  was  held  to  have 
made  himself  personally  liable. 

Xeither  can  it  be  said  that  the  term  *  trustees  '  was  used 
as  '  a  mere  description  of  the  general  relation  or  office 
which  the  person  signing  the  paper  holds  to  another  person 
or  to  a  corporation,  Avithout  indicating  that  the  parti- 
cular signature  is  made  in  the  execution  of  the  office  and 
agency.'  In  this  respect  the  case  differs  from  Tucker 
Manuf.  Co.  v.  Fairbanks.  98  ]\Iass.  101.  It  often  has 
happened  that  an  agent  for  another  person,  or  tlie  treas- 


28  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

urer  of  a  corporation,  has  made  himself  personally  respon- 
sible by  the  form  of  words  in  which  he  has  expressed 
himself  in  a  written  contract,  when  he  may  have  intended 
to  bind  his  principal  only.  Cases  in  which  this  question 
has  been  raised  have  often  been  before  this  and  other 
courts,  and  the  authorities  have  recently  been  collected  and 
reviewed  in  several  of  our  own  decisions.  See  Slawson  v. 
Loring,  5  Allen,  340;  Barlow  v.  Lee  Congregational 
Society,  8  Allen,  460;  Tucker  Manuf.  Go.  v.  Fairbanks, 
ubi  supra.  But  we  believe  no  case  can  be  found  in  which 
a  promise  '  as  trustee,'  etc.,  accompanied  with  an  express 
disclaimer  of  personal  liability,  would  fail  to  exempt  him. 

It  is  contended  that  if  these  defendants  are  not  liable 
upon  the  contract  as  a  note,  then  nobody  is  liable.  Even 
if  such  were  the  fact,  it  would  not  be  in  the  power  of  the 
court,  as  we  have  already  seen,  to  alter  the  contract  for 
the  purpose  of  giving  it  validity.  In  deciding  whether  the 
defendants  have  or  have  not  bound  themselves  we  need 
not  decide  whether  they  have  or  have  not  bound  their 
principals.  Abbey  v.  Chase,  6  Cush.  54.  But  even  if  the 
written  contract  should  fail  of  taking  effect  as  a  negotiable 
note,  it  might  still  be  operative  as  an  acknowledgment  of 
unpaid  debt,  which  the  mortgage  was  intended  to  secure. 
It  may  be  that  this  was  all  that  the  original  parties 
intended  or  supposed  to  be  material.  They  may  have 
considered  the  mortgage  sufficient  security,  without  the 
personal  responsibility  of  the  trustees. 

Our  conclusion,  therefore,  is  that  without  proof  that  the 
defendants,  as  trustees,  have  funds  of  the  association  in 
their  hands  applicable  to  this  debt,  no  actions  can  be  main- 
tained against  them.  ISTo  evidence  to  that  effect  having 
been  offered,  we  must  order 

Judgment  for  tlie  defendants. 


SEABURY   1-.  HUNGERFORD.  29 


^C^rwJ^' 


A, 


SEABURY   V.  HUXGERFORD. 

.1, 

Supreme  Court  of  New  York,  October,  1841.     2  Hill,  80.  ,  /  _   /iN**,.w 

Indorsement  of  a  promissory  note,  by  a  third  person,  to  secure  the  ..  »^ 

payee,  makes  such  party  liable  as  indorser  only.  Y^"^  o-^^  V«.  SmxX 

Assumpsit.     The  plaintiff  gave  in  evidence  a  promissory 
note  as  follows :  '  Knox,  March  30,  1837.    Six  months  after  -h^J.v-- 

date,  for  value  received,  we  jointly  and  severally  promise  '"  ' 
to  pay  Daniel  Seabury,  or  bearer,  the  sum  of  one  hundred 
and  twenty-five  dollars,  with  interest  from  date.  Justus 
Pickering.'  On  the  back  was  the  defendant's  name,  '  John 
1.  Hungerford,  backer,  Schoharie.'  On  this  evidence  the 
plaintiff  claimed  to  recover.  The  judge  decided  that  tlie 
defendant  was  to  be  regarded  as  an  indorser  of  the  note, 
and  that  the  plaintiff  must  show  a  demand,  and  notice  of 
non-payment;  that  the  defendant  could  not  be  charged  as 
maker  or  guarantor  without  showing  that  he  was  privy  to 
the  consideration  of  the  note.  The  plaintiff  excepted. 
A  witness  for  the  plaintiff  testified  that  he  heard  the 
defendant  say  that  if  it  had  not  been  for  getting  his  own 
pay  from  Pickering,  the  maker,  he,  Hungerford,  would 
not  have  signed  the  note.  This  conversation  was  near 
where  the  defendant  lived  in  Schoharie,  in  October,  1837. 
The  witness  went  with  the  plaintiff  to  demand  and  get  the 
money  on  the  note.  The  defendant  first  said  to  the  plain- 
tiff, '  You  are  too  late ;  you  should  have  come  on  the  loth 
of  September; '  but  after  looking  at  the  note  he  said,  '  You 
are  right.'  The  plaintiff  said  he  had  seen  Pickering  the 
day  before,  and  could  not  get  the  money  from  him  except 
$18,  which  he  then  paid.  There  was  no  proof  of  a 
demand  and  notice  at  the  proper  time  to  charge  the 
defendant  as  indorser.  The  judge  decided  that  this  evi- 
dence was  not  sufficient  to  charge  the  defendant  on  the 
ground  of  his  being  privy  to  the  consideration  of  the  note; 
and  that  the  fact  that  the  defendant  put  his  name  on  the 
note  to  enable  Pickering  to  procure  the  money  from  the 


30  CASES   OX  BILLS,  NOTES,  AND   CHEQUES. 

plaintiff  did  not  alter  the  case  —  the  defendant  was  an 
indorse!',  and  entitled  to  require  demand  and  notice.  The 
plaintiff  excepted,  and  the  jury  found  a  verdict  for  the 
defendant.  The  plaintiff  now  moved  for  a  new  trial,  on  a 
bill  of  exceptions. 

Broxsox,  J.,  for  the  court.  — Although  the  nature  of 
the  obligation  which  the  defendant  intended  to  contract 
was  sufficiently  manifested  by  putting  his  name  on  the 
back  of  the  note,  he  seems  to  have  added  the  word 
'  backer  '  for  the  purpose  of  declaring  still  more  explicitly 
that  he  was  to  be  regarded  as  an  indorser;  and  his  resi- 
dence was  given  for  the  purpose  of  indicating  the  place  to 
which  notice  might  be  sent  in  case  the  note  should  not  be 
paid  at  maturity  by  the  maker.  1  infer  also  from  the  con- 
versation between  the  parties  about  the  time  the  note  fell 
due,  that  they  both  regarded  the  defendant  as  standing  in 
the  character  of  an  indorser  and  entitled  to  notice  as  such. 
I  do  not  see  therefore  upon  what  principle  he  can  be 
charged  as  maker  or  guarantor.  It  would  be  substituting 
a  new  contract  for  the  one  which  the  parties  have  made. 

If  the  special  circumstances  which  have  been  mentioned 
are  laid  out  of  view,  the  result  will  still  be  the  same. 
When  a  man  writes  his  name,  without  anything  more,  on 
the  back  of  a  negotiable  promissory  note,  he  agrees  that 
he  will  pay  the  note  to  the  holder  on  receiving  due  notice 
that  the  maker,  on  demand  made  at  the  proper  time,  has 
neglected  to  pay  it.  This  is  the  legal  effect  of  the  in- 
dorsement, and  the  case  is  not  open  to  any  intendment,  — 
certainly  not  to  the  presumption  that  the  party  meant  to 
contract  a  different  obligation.  Proof  that  he  put  his  name 
on  the  note  for  the  purpose  of  giving  credit  to  the  maker, 
or  enabling  him  to  raise  money  upon  the  paper,  only 
shows  that  there  is  a  special  relation  between  him  and  the 
maker,  not  between  him  and  the  holder.  It  does  not 
change  the  nature  of  the  contract  of  indorsement  from 
what  it  would  be  had  the  note  actually  passed  through  his 


SEABURY   V.  HUNGERFORD.  31 

hands  in  the  usual  course  of  business  and  been  indorsed 
for  value.  If  this  be  not  so,  then  every  accommodation 
iudorser  may  be  treated  as  a  maker  or  guarantor  of  the 
paper. 

Now,  what  did  the  plaintiff  prove  for  the  purpose  of  obvi- 
ating the  objection  that  there  had  been  no  demand  and 
notice?  The  defendant  said,  about  the  time  the  note  fell 
due,  that  if  it  had  not  been  for  getting  his  own  pay  from 
Pickering,  the  maker,  he  would  not  have  signed  the  note. 
This  does  not  prove  that  there  was  originally  any  agree- 
ment or  understanding  between  the  plaintiff  and  the 
defendant  aside  from  the  contract  of  indorsement,  or  that 
they  had  any  communication  whatever  in  relation  to  the 
giving  or  indorsing  of  the  note.  The  most  that  can  be 
justly  inferred  from  the  admission  is,  that  the  defendant 
indorsed  for  the  accommodation  of  Pickering,  and  that  his 
motive  for  doing  so  was  the  expectation  of  getting  a 
debt  Avhich  Pickering  owed  him.  But  neither  the  fact  of 
his  being  an  accommodation  indorser,  nor  his  motive  for 
becoming  such,  can  affect  the  present  question.  The  plain- 
titf  had  nothing  to  do  with  the  mode  in  which  Pickering 
should  dispose  of  the  money  to  be  obtained  on  the  note; 
and  whether  the  defendant  did  an  act  of  mere  benevo- 
lence, or  whether  he  expected  to  derive  some  personal  ad- 
vantage from  the  indorsement,  cannot  alter  the  nature  of 
his  contract. 

If  we  assume  that  the  note  was  originally  passed  to  the 
plaintiff,  who  is  named  in  it  as  payee,  that  will  not  alter 
the  case.  The  defendant  might  still  have  been  charged  as 
indorser;  and  where  he  may  be  so  charged,  he  cannot,  I 
think,  be  made  liable  in  any  other  form.  The  note  is  pay-- 
able  to  the  plaintiff  or  bearer,  and  in  its  legal  effect  was 
payable  to  the  bearer.  The  plaintiff  might  have  declared 
that  Pickering  made  his  promissory  note  payable  to 
bearer,  and  delivered  it  to  the  defendant,  who  thereupon 
indorsed  and  delivered  it  to  the  plaintiff,  with  an  averment 
that   payment  was   demanded  of  the  maker  at  maturity, 


32  CASES  ON  BILLS,  NOTES,  ANT)  CHEQUES. 

and  due  notice  of  non-payment  given  to  the  defendant. 
The  plaintiff  might  also  have  transferred  the  note  by 
delivery  to  some  third  person,  and  then  the  holder  might 
have  declared  in  the  same  way ;  or  he  could  have  alleged 
that  Pickering  made  his  note  payable  to  Daniel  Seabury  or 
bearer,  that  Seabury  delivered  it  to  the  defendant,  who 
indorsed  and  delivered  it  to  the  holder.  But  without 
transferring  the  note,  if  the  plaintiff  had  taken  the  proper 
steps  for  that  purpose  there  could  be  no  difficulty  in  his 
declaring  and  recovering  against  the  defendant  as  indorser. 
We  had  occasion  to  consider  this  question  in  Dean  v. 
Hall,  17  Wendell,  214,  and  that  case  will  be  found  to  be 
entirely  decisive  of  the  one  at  bar.  Coleman  made  his 
promissory  note  payable  to  Howard  or  bearer,  upon  the 
back  of  which  Hall  indorsed  his  name,  and  the  note  was 
then  delivered  to  Howard,  the  payee  named  in  it.  We 
held  that  there  was  no  legal  difference  between  a  note  pay- 
able to  bearer  and  one  payable  to  a  particular  person  or 
bearer;  that  Howard,  the  payee,  or  Dean,  to  whom  he  had 
transferred  the  note,  might  either  of  them  have  declared 
and  recovered  against  Hall  as  indorser;  and  that  they 
could  not  charge  him  in  any  other  character. 

If  the  note  had  not  been  negotiable,  or  if  for  any  other 
reason  the  case  had  been  such  that  the  defendant  could  not, 
by  the  exercise  of  proper  diligence,  have  been  charged 
as  indorser,  and  there  had  been  an  agreement  that  he 
would  answer  in  some  other  form,  then  the  plaintiff  might 
have  written  over  the  name  such  a  contract  as  would  carry 
into  effect  the  intention  of  the  parties.  When  a  contract 
cannot  be  enforced  in  the  particular  mode  contemplated  by 
the  parties,  the  courts,  rather  than  suffer  the  agreement 
to  fail  altogether,  will,  if  possible,  give  effect  to  it  in  some 
other  way.  But  they  never  make  contracts  for  parties, 
nor  substitute  one  contract  for  another.  This  was,  in 
legal  effect,  regular  mercantile  paper,  upon  which  the 
defendant  contracted  the  obligation  of  an  indorser  within 
the  law  merchant;  and  by  that  obligation,  and  no  other, 
he  is  bound. 


SEABURY  V.  HUNGERFORD.  33 

It  is  said  that  the  defendant  was  privy  to  the  considera- 
tion for  which  the  note  was  given,  and  therefore  liable  as 
maker  or  guarantor.  But  it  is  not  enough  that  the 
indorser  knows  what  use  is  to  be  made  of  the  note,  or  that 
he  indorses  for  the  purpose  of  giving  the  maker  credit, 
either  generally  or  with  a  particular  individual.  If  the 
note  is  negotiable,  the  only  inference  to  be  drawn  from 
the  fact  of  his  putting  his  name  on  the  back  of  it  is,  that 
he  intended  to  give  the  maker  credit  by  becoming  answer- 
able as  indorse)-;  and  this  inference  is  so  strong  that  it 
will  prevail  even  Avhere  his  obligation  as  indorser  can- 
not be  made  operative  without  first  obtaining  the  name  of 
another  person  to  the  paper.  Herrick  v.  Carman,  12 
Johns.  159;  Tillman  v.  Wheeler,  17  id.  326.  Before  he 
can  be  made  liable  as  maker  or  guarantor,  there  must  at 
the  least  be  an  agreement  that  he  will  answer  as  si;ch. 
Nelson  V.  Dubois,  13  Johns.  175.  And  where  a  parol 
agreement  to  that  effect  is  shown,  I  do  not  see  how  it  can 
be  made  to  take  the  place  of  the  written  contract  of  indorse- 
ment. In  other  cases  the  rule  is,  that  when  parties  have 
come  to  a  written  contract,  that  is  taken  as  the  evidence  of 
their  final  agreement,  and  all  prior  negotiations  are  merged 
in  it.  In  Nelson  r.  Dubois  the  defendant  agreed  to  become 
security  for  Brundige,  and  to  guaranty  the  payment  of  a 
note  which  B.  was  about  to  make  to  the  plaintiff;  but 
when  the  contract  came  to  be  reduced  to  writing,  it  took 
the  form  of  a  negotiable  promissory  note  upon  which  the 
defendant  might  have  been  charged  as  indorser.  That  was 
the  final  agreement  between  the  parties,  and  I  see  no  prin- 
ciple upon  which  the  plaintiff  could  be  allowed  to  abandon 
the  written  contract  and  go  back  to  the  prior  negotiations 
for  the  purpose  of  charging  the  defendant  as  guarantor. 
And  although  the  defendant  was  charged  in  that  form,  the 
case  is  not,  I  think,  an  authority  for  the  position  which 
it  is  usually  cited  to  support.  The  point  that  the  defend- 
ant might  have  been  made  answerable  as  indorser  was 
neither  taken  at  the  trial  nor  on  the  argument,  nor  was  it 

3 


34  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

mentioned  by  the  court;  but  the  contrary  was  assumed  in 
every  stage  of  the  cause.  The  only  objection  made  at  the 
trial  or  on  the  argument  was,  that  the  case  fell  within  the 
influence  of  the  Statute  of  Frauds.  It  was  assumed  thac 
the  defendant  could  only  be  charged  as  guarantor,  and  the 
objection  was  that  the  contract  of  guaranty  should  have 
been  written  out  at  the  time  the  defendant  put  his  name  on 
the  note.  Spencer,  J.,  who  delivered  the  opinion  of  the 
court,  stated  at  the  outset  that  the  case  turned  on  the 
point  whether  the  promise  was  within  the  Statute  of 
Frauds.  He  then  proceeded  to  cite  cases  where  the  party 
had  been  held  answerable  as  guarantor,  although  the  con- 
tract had  not  been  written  out  in  full  at  the  time;  but 
they  are  all  cases  where  he  could  not  have  been  charged 
as  indorser.  Nelson  v.  Dubois  is  then  an  authority  for  the 
position  that  one  who  puts  his  name  in  blank  on  the  back 
of  a  promissory  note  may  be  held  liable  as  maker  or  guar- 
antor when  there  is  an  agreement  to  that  effect,  and  when 
he  could  not  be  charged  as  indorser :  the  case  is  not  within 
the  Statute  of  Frauds.  But  it  is  not  an  authority  for  say- 
ing that  the  usual  contract  of  indorsement  upon  commercial 
paper  can  be  changed  into  something  else  by  showing  a 
prior  parol  agreement  to  be  answerable  in  some  other  form. 
This  court  could  never  have  intended  to  sanction  the  doc- 
trine that  the  holder  of  a  negotiable  promissory  note  may 
abandon  the  contract  in  writing  actually  made  by  the 
indorser  and  substitute  another  contract  in  its  place. 

In  any  view  of  the  case  of  Nelson  v.  Dubois  it  proves 
nothing  against  this  defendant,  for  here  there  was  not 
only  a  regular  contract  of  indorsement,  but  there  is  not  a 
particle  of  evidence,  by  parol  or  otherwise,  that  the 
defendant  ever  made  any  different  agreement.  It  is 
impossible  to  charge  him  as  maker  or  guarantor.  The 
cases  on  this  subject  were  so  fully  considered  in  Dean 
V.  Hall,  17  Wendell,  214,  that  I  do  not  think  it  necessary 
to  examine  them  on  the  present  occasion. 

y  Nelson,  C.  J.,  dissented.  JSfew  trial  denied. 

y 


SYLVESTER   v.  DOWNER.  35 

SYLVESTEE  v.  DOWNER.  *^ 

Supreme  Court  of  Vermont,  March,  1848.     20  Vt.  355. 

Indorsement  of  a  promissory  note,  by  a  third  person,  to  secure  the  payee, 
makes  such  party  liable  presumptively  as  a  maker  of  the  note;  but  evi- 
dence is  proper  to  show  what  the  understanding  in  fact  was  when  the 
party  so  signed. 

Assumpsit.  The  plaintiff  declared  against  the  defendant 
as  maker  of  a  promissory  note  payable  to  Austin  &  Fay, 
or  order,  and  by  them  indorsed  to  the  plaintiff's  testator. 
There  was  a  count  also  for  money  had  and  received.  Plea, 
the  general  issue. 

The  plaintiff  offered  in  evidence  a  promissory  note  for 
^75.00,  payable  to  Austin  &  Fay,  or  order,  Avith  the  fol- 
lowing indorsements :  '  For  value  received  pay  the  contents 
to  Lemuel  Sylvester.  Austin  &  Fay.'  '  For  value  received 
I  promise  to  pay  this  note  according  to  its  tenor  to  Lemuel 
Sylvester.  Solomon  Downer.'  To  this  evidence  the  defend- 
ant objected,  for  variance ;  but  the  objection  was  overruled. 
The  indorsements  were  made  in  blank,  and  were  filled  up 
by  the  plaintiff  before  trial. 

The  plaintiff  produced  evidence  that  Austin  &  Fay  were 
indebted  to  Lemuel  Sylvester,  and  that  the  defendant  had 
agreed  to  pay  the  debt,  and  was  then  the  owner  of  the 
note  in  suit;  that  the  defendant  then  proposed  to  Lemuel 
Sylvester  that  he  would  let  him  have  tbe  note  in  part  pay- 
ment of  that  debt,  and  that  he,  the  defendant,  '  would  make 
it  good  to  him  by  putting  his  name  upon  the  back  of  it, 
and  Austin  &,  Fay  should  do  the  same ; '  that  each  of  the 
partners  of  said  firm  Avas  then  sitting  at  the  same  table 
with  the  defendant  and  Lemuel  Sylvester,  and  that  Lemuel 
then  agreed  to  receive  the  note,  as  the  defendant  offered, 
and  that  the  defendant  wrote  his  name  upon  the  back  of 
the  note  and  then  delivered  it  to  Austin,  and  that  he  wrote 
upon  it  the  name  of  the  firm,  and  that  the  note  was  then 
delivered  to   and   received   by  Lemuel   Sylvester  in  part 


36  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

payment  of  said  debt.     There  was  no  other   evidence   in 
the  case. 

The  conrt  charged  the  jury  that  if  they  found  the  facts 
as  testified,  and  considered  from  the  evidence  that  the 
defendant  intended,  by  what  he  said  at  the  time  of  trans- 
ferring the  note  to  Lemuel  Sylvester,  to  assume  an  absolute 
and  unconditional  undertaking  to  pay  the  note  or  see  it 
paid,  according  to  its  tenor,  they  should  return  a  verdict 
for  the  plaintiff.  Verdict  for  plaintiff.  Exceptions  by 
defendant. 

Eedfield,  J.,  for  the  court. — This  is  an  action  in 
common  form  against  the  defendant  as  a  sole  maker  of  a 
promissory  note.  The  note,  on  being  produced,  showed 
his  name  indorsed  upon  it,  and  also  that  of  the  payees  of 
the  note.  This,  according  to  the  decisions  of  this  court, 
repeatedly  made,  imposed  upon  the  defendant  the  obligation 
of  the  maker  of  the  note,  with  this  difference  only,  that, 
his  undertaking  being  in  blank,  as  between  the  parties  to 
it,  it  was  susceptible  of  being  controlled  by  oral  evidence 
of  the  real  obligation  intended  to  be  assumed  at  the  time 
of  signing.  This  has  been  so  often  declared  by  this  court 
that  it  seems  needless  to  refer  to  the  decisions.  But  1  will 
advert  to  some  of  them  with  a  view  to  extract  from  them 
the  principle  of  the  decisions. 

The  first  case  which  distinctly  assumed  this  ground  is 
that  of  Knapp  v.  Parker,  6  Vt.  642.  In  that  case  the 
note  had  been  due  before  it  was  indorsed  by  the  defendant, 
and  he  was  sued  as  maker  and  the  suit  sustained.  It  is 
true  the  court,  in  their  opinion,  advert  to  a  prior  contract 
resting  in  parol  merely,  but  this  was  clearly  merged  in 
the  writing.  It  was  of  no  importance  in  determining  the 
prima  facie  legal  obligation  resulting  from  the  signature. 
The  law  determines  that  ;  and  the  oral  evidence  was 
important  only  as  tending  to  show  that  the  defendant 
intended  to  assume  just  such  an  obligation  as  he  did  by  the 
blank  signature.  .  .  .  [Reviewing  Flint  v.  Day,  9  Vt.  345, 


SYLVESTER   v.  DOWNER.  37 

Sanford  v.  Norton,    14  Vt.  228,  and   Strong  v.  Eiker,  16 
Vt.  554]. 

But  what  this  court  has  repeatedly  held  upon  this  subject 
is,  that  he  who  writes  his  name  upon  the  back  of  a  note, 
if  he  were  not  before  a  party  to  it,  assumes  the  same  obli- 
gation as  if  he  wrote  his  name  upon  the  face  of  the  instru- 
ment; and  that,  although  he  do  this  long  after  the  making 
of  the  note,  it  shall  make  no  difference.  If  he  consent  to 
be  thus  bound,  and  induce  others  to  take  the  note  under 
that  expectation,  he  shall  be  estopped  to  deny  that  fact, 
and  is  treated  to  all  intents  the  same  precisely  as  if  he  had 
signed  the  note  in  its  inception.  But  the  signature  being 
blank,  he  may  undoubtedly  show  that  he  was  not  under- 
stood to  assume  any  such  obligation. 

But  the  proof  in  the  present  case  tended  to  show,  and 
the  jury  have  so  found,  that  the  defendant  did  intend  to 
assume  an  unconditional  obligation  to  pay  the  note,  ac- 
cording to  its  tenor.  This  puts  at  rest  all  pretence  that 
the  defendant  was  not  understood  to  assume  the  common 
obligation  which  his  signature  imported.  This  was  that 
of  the  maker  of  a  note  to  Austin  &  Fay,  as  that  was  the 
form  of  the  note  at  the  time  he  indorsed  it;  and  had  they 
refused  to  indorse  it,  the  defendant  might  have  been  sued 
as  maker,  in  their  names,  according  to  the  case  of  Strong 
V.  Eiker,  16  Vt.  554.  But  they  did  indorse  it.  He  was 
then  liable  as  maker,  to  any  person  who  might  beconie  a 
holder  of  the  note,  and  especially  to  the  plaintiff's  testator, 
for  he  assumed  the  obligation  with  the  understanding  that 
the  note  was  going  immediately  into  his  hands,  and  that 
the  defendant  was  liable  to  him.  This  point  is  fully 
decided  by  Sanford  v.  Norton,  14  Vt.  228.  The  declara- 
tion in  this  case  then  was  precisely  according  to  the  proof, 
—  that  the  defendant  made  a  note  to  Austin  &  Fa}',  which 
was  indorsed  to  the  plaintiff's  testator.  .  .  .  [Competency 
of  a  witness.] 

The  fact  that  the  defendant's  indorsement  was  filled  up 
differently  from  the  declaration,  and  differently  from  the 


38  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

import  of  his  undertaking,  is  of  no  importance,  as  that  is 
mere  form,  and  may  be  made  at  any  time,  and  if  made 
wrong  may  be  corrected  at  any  time.  It  is  just  as  well 
if  it  be  not  made  at  all. 

Judgment  affirmed. 


UNION  BANK  OF  WEYMOUTH  AND  BRAINTEEE 

V.    WILLIS. 

Supreme  Court  of  Massachusetts,  October,  184:4.     S  Met.  504. 

If  a  persou  not  a  party  to  a  note  place  his  name  upon  the  back  of  it  at 
the  time  it  was  made,  he  is  lial)le  as  maker;  ami,  wheu  tlie  uote  is  iu  the 
hands  of  a  bona  tide  holder,  the  presumption  in  the  absence  of  proof  is 
that  the  name  was  placed  upon  it  at  the  time  it  was  executed. 

Assumpsit  by  the  indorsees  against  the  indorser  of  a 
promissory  note  of  the  following  tenor:  'August  8,  1843. 
Eor  value  received,  I  promise  Tilley  Willis  to  pay  him, 
or  order,  $350,  in  four  months  from  date.  T.  D.  Thomp- 
son.'  On  the  back  was  the  name  of  B.  L.  Mirick  &  Co., 
and  under  that  name  was  the  name  of  the  defendant,  both 
indorsements  being  in  blank. 

At  the  trial  before  the  Chief  Justice,  the  plaintiffs' 
cashier  testified  that  they  discounted  the  note  for  Thomp- 
son, and  that,  when  it  was  discounted,  the  names  stood  on 
the  note  as  they  now  do.  There  was  no  evidence  that  the 
note  was  presented  to  Mirick  &  Co.  for  payment;  but  there 
was  evidence  tending  to  show  that  notice  of  dishonor  was 
given  to  them,  as  indorsers,  as  well  as  to  the  defendant. 

The  defendant  contended  that  Mirick  &  Co.  were  to  be 
considered  as  joint,  or  joint  and  several,  promisors,  and 
that  the  defendant  was  not  responsible  as  indorser,  without 
proof  of  presentment  to  them  for  payment.  But  it  was 
ruled  that  they  were  not  to  be  so  considered  as  promisors, 
as  that  presentment  of  the  note  to  them,  and  demand  of 
payment  of  them,  were  necessary  to  charge  the  defendant. 
A   verdict  was   returned   for  the   plaintiffs,  which    is   to 


UNION  BANK  OF  WEYMOUTH,  ETC.  v.  WILLIS.  39 

be  set  aside,  aud  a  new  trial  granted,  if  the  ruling  was 
incorrect. 

Hubbard,  J.,  for  the  court.  — It  is  admitted  that  the 
note  was  not  presented  for  payment  to  Mirick  &  Co. ;  and 
the  question  is,  whether  the  omission  to  do  it  discharges 
the  indorser. 

If  the  subject  now  brought  before  us  were  a  new  one,  we 
should  hesitate  in  giving  countenance  to  such  an  irregu- 
larity as  to  hold  that  any  person  whose  name  is  written 
on  the  back  of  a  note  should  be  chargeable  as  a  promisor. 
We  should  say  that  a  name  written  on  the  paper,  which 
name  was  not  that  of  the  payee,  nor  following  his  name  on 
his  having  indorsed  it,  was  either  of  no  validity  to  bind 
such  individual,  because  the  contract  intended  to  be  entered 
into,  if  any,  was  incomplete  or  within  the  Statute  of 
Frauds  ;  or  that  he  should  be  treated,  by  third  parties, 
simply  as  a  second  indorser;  leaving  the  payee  and  himself 
to  settle  their  respective  liabilities,  according  to  their  own 
agreement.  But  the  validity  of  such  contracts  has  been  so 
long  established,  and  the  course  of  decisions,  on  the  whole, 
so  uniform,  that  we  have  now  only  to  apply  the  law,  as 
it  has  been  previously  settled,  in  order  to  decide  the 
present  suit. 

The  first  case  of  this  description,  of  which  any  mention 
is  made  in  the  reports,  is  that  of  Sumner  v.  Parsons,  tried 
before  this  court  in  Lincoln  County,  July  Term,  1801. 
The  facts  were  these:  '  Parsons  wrote  his  name  on  a  paper 
and  gave  it  to  John  Brown,  but  there  was  no  evidence  of 
the  intent,  or  of  any  connection  in  business  between 
them.  Brown  made  a  note,  on  the  other  side,  payable 
to  Jesse  Sumner  or  order,  on  demand,  with  interest,  and 
signed  it,  and  thirty  days  after  made  a  partial  payment  on 
it.  Sumner  then  got  a  writing  in  these  words  over  the 
name  of  Parsons:  "In  consideration  of  the  subsisting 
connection  between  me  and  my  son-in-law,  John  Brown,  I 
promise  and  engage  to  guaranty  the  payment  of  the  con- 


40  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

tents  of  the  within  note,  on  demand."  And  he  sued  Par- 
sons, decharing  on  the  promise,  specially  stating  it  and  the 
note,  but  did  not  aver  any  demand  on  John  Brown,  or 
notice  to  Parsons.  In  two  trials  in  the  Supreme  Judicial 
Court,  it  was  held  that  Parsons  was  liable,  and  that  Sumner 
had  a  right  to  fill  the  indorsement  so  as  to  make  Parsons  a 
common  indorser  of  the  note,  with  the  rights  and  obliga- 
tions of  such,  or  a  guarantor,  warrantor,  or  surety,  liable  in 
the  first  instance,  and,  in  all  events,  as  a  joint  and  several 
promisor  would  be.'  Am.  Prec.  Declarations,  113.  Mr. 
Dane,  who  cites  it  in  his  Abridgment,  Vol.  I.  416,  417, 
remarks  that  '  this  case  was  carried  as  far  as  any  case  had 
gone,  and  on  the  review  the  court  was  not  unanimous;  and 
it  has  since  been  questioned;  '  and  we  have  no  doubt  with 
good  reason;  for  the  holder  of  the  paper,  having  himself 
set  out  the  contract  by  the  words  written  over  the  name  of 
the  defendant,  should  have  been  held  by  its  terms,  and  the 
legal  effect  should  have  been  given  to  the  material  word 
'guaranty.'  And,  in  that  view  of  the  contract,  the 
promise  of  Parsons  was  only  to  pay  after  a  demand  upon 
Brown  for  payment  and  a  refusal  by  him,  and  of  which 
Parsons  should  have  had  notice.  But  the  court  must  have 
construed  the  writing  as  constituting  him  an  original 
promisor,  and  so  bound,  absolutely,  without  notice.  And, 
in  our  apprehension,  the  writing  of  the  guaranty  over  the 
name  of  Parsons  ought  not  to  have  been  held  as  an  act 
obligatory  on  him;  but  he  should  have  been  treated,  if  held 
at  all,  as  an  indorser  of  the  note,  and,  as  such,  subject  to  the 
liabilities,  and  entitled  to  the  notice,  of  an  indorser.  See 
Beckwith  v.  Angell,  6  Conn.  325,  opinion  of  Hosmer,  C.  J. 
The  next  case  which  came  before  the  court  was  that  of 
Josselyn  v.  Ames,  3  Mass.  274.  By  the  report,  it  appears 
that  John  Ames  was  indebted  on  note  to  the  plaintiff,  who 
demanded  security,  and  John  offered  his  brother  Oliver  as 
surety,  who  was  accepted.  John  then  made  a  note  to 
Oliver,  not  negotiable,  and  Oliver  put  his  name  on  the  back 
in  blank.     The  plaintiff  received  it  and  gave  up  his  former 


UNION  BANK   OF   WEYMOUTH,  ETC.  v.  WILLIS.  41 

note,  and  afterwards  wrote  over  the  defendant's  name  the 
same  words  as  in  Sumner  v.  Parsons,  with  this  additional 
clause :  *  and  in  consideration  of  receiving  from  Elisha 
Josselyn  a  note  of  the  said  John  of  the  same  amount.'  The 
court  held  that  the  plaintiff  could  not  recover  in  that  action, 
but  might  cancel  the  words  written,  and  substitute,  '  for 
value  received,  I  undertake  to  pay  the  money  within  men- 
tioned to  Elisha  Josselyn, '  and,  upon  such  an  indorsement, 
might  maintain  an  action  upon  the  facts  reported. 

In  what  light  the  court  held  the  defendant  does  not  dis- 
tinctly appear;  but  we  presume  as  an  original  promisor,  from 
the  manner  in  which  the  case  of  Sumner  v.  Parsons  is  spoken 
of.  '  The  guarantor  in  that  case,'  they  say,  'was  not  the 
promisee,  but  a  stranger,  who  warranted  the  payment  to  him. 
He  cannot  himself  warrant  to  a  third  person  payment  of 
a  note  made  payable  to  himself  and  not  negotiable.' 

The  next  reported  case  is  that  of  Hunt  v.  Adams,  5  Mass, 
358,  which  was  assumpsit  on  a  note  given  by  Chaplin  to 
Bennet,  under  which  the  defendant  wrote,  '  I  acknowledge 
myself  holden  as  surety  for  the  payment  of  the  demand  of 
the  above  note.  Witness  my  hand.  Barnabas  Adams.' 
This  cause  was  much  considered,  and  the  court  ruled  that 
the  defendant,  Adams,  was  to  be  charged  as  a  promisor, 
and  that  his  holding  himself  as  surety  did  not  abridge  or 
afPect  the  plaintiff's  rights,  but  only  was  evidence,  as 
between  the  promisor  and  himself,  that  he  had  signed  for 
his  accommodation.  Other  cases  between  the  same  par- 
ties, on  similar  notes,  afterwards  arose,  and  were  decided 
in  the  same  manner.     6  Mass.  519. 

Immediately  after,  occurred  the  case  of  Carver  v. 
Warren,  5  Mass.  545.  That  was  on  a  note  made  by  one 
Cobb  to  the  plaintiff,  and  on  the  back  of  which  the  defend- 
ant wrote  his  name;  and  the  plaintiff  filled  the  indorse- 
ment, and  declared  upon  it  as  his  promise.  The  defendant 
demurred  to  the  declaration,  on  the  ground  that  this  was 
but  a  promise  to  pay  the  debt  of  another,  and  was  void 
for  want  of  consideration.     But  the  court  held  that,  by  the 


42  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

pleadings,  each  promised  to  pay  the  same  sum,  and  that 
the  defendant's  promise  did  not  import  any  guaranty  or 
coHateral  stipulation  ;  and  that  if  the  defendant  had 
indorsed  as  guarantor,  and  the  present  indorsement  was 
filled  up  without  his  consent,  or  any  authority  from  him, 
he  should  have  pleaded  the  general  issue,  and  on  the  trial 
he  might  have  availed  himself  of  this  defence.  And  so 
the  plaintiff  had  judgment  on  the  demurrer. 

The  case  of  Hemmenway  v.  Stone,  7  Mass.  58,  followed. 
There  the  note  ran, '  I  promise  to  pay  F.  M.  Stone  or  order, ' 
and  was  signed  B.  Chadwick;  and  below  was  signed  by 
the  defendant.  The  court  held  that  it  was  a  joint  and 
several  note,  like  the  case  of  March  v.  Ward,  Peake's  Cas. 
130.     See  also  Bayley,  Bills,  2d  Am.  ed.,  44. 

The  next  case  was  White  v.  Rowland,  9  Mass.  314, 
which  was  on  a  note  payable  by  one  Taber  to  the  plaintiff, 
and  on  the  back  of  it  was  written,  '  for  value  received,  we 
jointly  and  severally  undertake  to  pay  the  money  within 
mentioned  to  the  said  William  White.  I.  Coggeshall,  Jr. 
Jno.  H.  Rowland.'  The  court  held  that  this  undertaking 
was  within  the  principle  settled  in  Hunt  v.  Adams,  and 
was  the  same  as  if  the  party  had  signed  his  name  on  the 
face  of  it ;  and  that  he  was  well  charged  as  a  several  original 
promisor. 

The  case  of  Moies  v.  Bird,  11  Mass.  436,  which  suc- 
ceeded, is  substantially  like  the  present.  A  note  was 
made  to  the  plaintiff,  and  signed  by  Benjamin  Bird,  and 
the  defendant  signed  his  name  in  blank  on  the  back  of  the 
note.  The  court  say,  the  defendant  '  leaves  it  to  the  holder 
of  the  note  to  write  anything  over  his  name  which  might 
be  considered  not  to  be  inconsistent  with  the  nature  of  the 
transaction.  The  holder  chooses  to  consider  him  as  a 
surety,  binding  himself  originally  with  the  principal ;  and 
we  think  he  has  a  right  so  to  do.  If  he  was  a  surety,  then 
he  may  be  sued  as  an  original  promisor.  ' 

In  the  case  of  Baker  v.  Briggs,  8  Pick.  130,  which  was 
an  action  to  recover  the  amount  of  a  promissory  note  made 


UNION  BANK  OF   WEYMOUTH,  ETC.  v.  WILLIS.         43 

by  one  Eyan  to  the  plaintiff,  the  name  of  the  defendant, 
Briggs,  was  written  on  the  back  of  it,  and  the  courts  say 
that,  according  to  several  decisions  it  was  right  to  declare 
against  him  as  promisor,  though  he  stood  in  the  relation 
of  surety  to  Ryan,  who  signed  the  note  on  the  face  of  it. 

The  case  of  Chaffee  v.  Jones,  19  Pick.  260,  was  assumpsit 
on  a  note  signed  by  Israel  A.  Jones,  as  principal,  and  Eber 
Jones  and  E.  Owen  &  Sons,  as  sureties,  by  which  they 
jointly  and  severally  promised  to  pay  the  president,  etc.,  of 
the  Housatonic  Bank,  or  their  order ;  and  the  plaintiff  put 
his  name  on  the  back  of  the  note,  in  blank.  The  plaintiff 
was  called  upon,  after  the  neglect  of  the  makers,  and  he 
paid  it  to  the  bank.  The  court  held  that  where  one,  not  a 
promisor  nor  indorser,  puts  his  name  on  a  note,  meaning  to 
make  himself  liable  with  the  promisor,  he  is  to  be  regarded 
as  a  joint  promisor  and  surety.  He  is  not  liable  as  indorser, 
for  the  note  is  not  negotiated,  nor  a  title  made  to  it,  through 
his  indorsement ;  nor  as  guarantor,  there  being  no  distinct 
consideration  ;  but  he  means  to  give  security  and  validity 
to  the  note  by  his  credit  and  promise,  and  it  is  immaterial, 
for  this  purpose,  on  what  part  of  the  note  he  places  his 
name.  So  in  Austin  v.  Boyd,  24  Pick.  64,  where  the  defend- 
ant's name  was,  in  like  manner,  on  the  note,  it  was  held  that 
the  party,  by  thus  putting  his  name  on  the  back,  makes  him- 
self an  original  promisor.  He  intends  by  it  to  give  credit 
to  the  note. 

The  case  of  Samson  v.  Thornton,  3  Met.  275,  was  assump- 
sit on  a  note  made  by  Benjamin  Russell  to  the  plaintiff, 
and  was  indorsed  by  the  defendant  Thornton;  and  the  de- 
claration charged  him  as  an  original  promisor.  The  court 
there  ruled  that  the  defendant,  not  being  the  payee  of  the 
note,  must  be  held  to  stand  in  the  character  of  an  original 
joint  promisor  and  surety. 

The  case  of  Richardson  v.  Lincoln,  5  Met.  201,  is  of  the 
same  type.  There  the  court  held  that  the  defendant,  not 
being  payee,  but  having  put  his  name  in  blank  on  the  note, 
must  be  considered  as  an  original  promisor  and  surety,  if 


44  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

he  put  it  on  simultaneously  with  the  promisor,  as  an  original 
contractor.     See  also  Sumner  v.  Gay,  4  Pick.  311. 

The  same  questions  have  arisen  in  New  York  in  various 
cases,  and  have  been  decided  in  a  similar  manner.^  They  will 
be  found  cited  in  Story  on  Notes,  §§  59,  472-480,  where  the 
subject  is  fully  discussed,  and  the  authorities  examined. 

To  hold  the  party,  however,  as  promisor,  where  the  name 
alone  is  written,  it  must  appear  that  he  made  the  promise 
at  the  time  when  the  note  itself  was  made ;  otherwise,  he 
may  either  not  be  chargeable  at  all,  or  be  chargeable  as 
surety  or  guarantor,  according  to  the  facts  proved.  Carver 
V.  Warren,  5  Mass.  545 ;  Teuney  v.  Prince,  4  Pick.  385 ; 
Baker  y.  Briggs,  8  Pick.  122,  130 ;  Oxford  Bank  v.  Haynes, 
8  Pick.  423;  Story  on  Notes,  §§  473,  474;  Beck  with  v. 
Angell,  6  Conn.  315.  But  that  the  promise  was  made  at 
the  same  time  with  the  note  is  a  fact  which  is  to  be  pre- 
sumed when  the  note  is  in  the  hands  of  a  bona  fide  holder, 
and  nothing  is  shown  to  the  contrary.  And,  in  the  present 
case,  the  note  was  offered  to  the  plaintiffs  for  discount  by 
the  maker  himself,  with  the  names  of  Mirick  &  Co.  and 
Willis  on  the  back  of  it ;  showing  it,  therefore,  to  have 
been  an  original  undertaking  on  their  part. 

It  was  contended,  in  the  argument,  that  Mirick  &  Co. 
were  merely  sureties,  and  that  the  plaintiffs  had  a  right  to 
treat  them  as  such,  and  therefore  were  not  bound  to  demand 
payment  of  them  as  makers,  as  a  necessary  step  to  enable 
them  to  charge  the  indorser ;  the  relation  of  promisor, 
surety,  and  guarantor  being  distinct.  There  is,  unquestion- 
ably, a  distinction  between  these  several  undertakings  ;  and 
always  so  in  regard  to  a  mere  guarantor.  But  as  to  the 
subsisting  relations  between  a  principal  and  surety,  they 
rarely  affect  the  contract  between  the  creditor  and  surety. 
A  man  may  be  equally  a  surety  and  an  original  promisor ;  as 
where  the  promise  is,  I,  A  B,  as  principal,  and  I,  C  D,  as 
surety,  pi-omise  to  pay ;  or  where  the  party  signs,  and  adds 
to  his  name  the  word  'surety.'     This  does  not  make  him 

1  A  mistake.     See  ante,  p.  29  ;  Bills  and  Notes  (Students'  Series),  33. 


DAVIS  V.  CLARKE.  45 

less  a  promisor.  It  only  defines  the  relation  between  him 
and  his  co-promisor;  and,  as  promisor,  the  necessity  of  a 
presentment  to  him  is  not  dispensed  with,  if  the  intention 
of  the  holder  of  the  note  is  to  charge  the  indorser.  It  is 
not  for  the  holder  to  choose  in  what  character  he  will  con- 
sider the  party  who  has  put  his  name  on  the  note  ;  but  he 
must  treat  him  as  sustaining  that  legal  relation  which  the 
facts  establish.  If  he  put  his  name  on  the  note  at  the  time 
it  was  made,  like  the  case  at  bar,  he  is  a  promisor ;  if  after 
the  making  of  the  paper,  he  is  a  surety  or  a  guarantor,  ac- 
cording to  the  agreement  upon  which  he  gives  his  signature. 
The  fixing  of  the  relation  of  the  party,  when  he  enters  into 
the  contract,  is  necessary  for  the  protection  of  holders,  and 
for  guarding  the  rights  of  indorsers  whose  liability  is  con- 
ditional. If  it  were  held  otherwise,  I  do  not  well  see  how 
such  contracts  could  be  supported  against  the  objection  of 
being  void  as  within  the  Statute  of  Frauds.  And,  as  it  is, 
I  consider  these  engagements  rather  as  exceptions  to  the 
statute  than  in  any  other  light,  and  as  growing  out  of,  or 
rather  ingrafted  upon,  the  law  merchant  applicable  to  regu- 
larly drawn  bills  of  exchange  and  promissory  notes. 

Upon  this  view  of  the  law,  as  drawn  from  the  various 
cases,  we  consider  Mirick  &  Co.  to  have  been  joint  and 
several  promisors  with  Thompson,  and  liable  in  like  manner 
with  him. 

See  Bills  and  Xotes  (Students'  Series),  105,  note. 

s 

DAVIS   V.    CLARKE. 

Queen's  Bench  of  England,  Trinity,  1844.     6  Q.  B.  16. 

John  Hart  drew  a  bill  payable  to  himself  or  order,  addressed  to  John 
Hart.  C  wrote  across  this,  '  accepted,  H  .1  C  Held,  that  C  could  not  be 
sued  as  acceptor  of  a  bill  of  exchange  directed  to  him. 

Assumpsit.  The  first  count  stated  that '  one  John  Hart, ' 
on  8th  March,  1838,  '  made  his  bill  of  exchange  in  writing 
and  directed  the   same   to   the    defendant,    and    thereby 


46  CASES   ON   BILLS,  NOTES,  AND  CHEQUES. 

required  the  defendant  to  pay  to  him  or  his  order  £100,' 
value  received,  at  twelve  months  after  date,  which  had 
elapsed,  etc.,  '  and  the  defendant  then  accepted  the  said 
bill,  and  the  said  John  Hart  then  indorsed  the  same  to 
the  plaintiff;  '  averment  of  notice  to  defendant,  promise 
by  him  to  pay  plaintiff,  and  that  he  did  not  pay.  There 
was  also  a  count  on  an  account  stated. 

The  first  plea  denied  the  acceptance  ;  the  second  the 
promise;  the  third  alleged  a  discharge  of  defendant  by  the 
Insolvent  Debtors'  Court.  Replication  joining  issue  on 
the  first  two  pleas,  and  traversing  the  discharge  alleged  in 
the  third,  on  which  issue  was  joined. 

On  the  trial  a  written  paper,  in  the  following  terms,  was 
given  in  evidence  for  the  plaintiff :  — 

'  £100 

'LoxDoy,  8th  March,  1838. 

'  Twelve  months  after  date  pay  to  me  or  my  order  one 
hundred  pounds,  value  received. 

'John  Hakt. 
'To  Mr.  John  Haet.' 

Across  the  face  of  this  instrument  was  written,  in 
defendant's  hand,  '  Accepted.  H.  J.  Clarke,  payable  at 
319  Strand.' 

Ko  other  evidence  being  produced,  the  court  directed  a 
nonsuit.     Case  argued  on  a  rule  nisi  for  a  new  trial. 

Lord  Denmax,  C.  J.  —  There  is  no  authority,  either  in 
the  English  law  or  the  general  law  merchant,  for  holding 
a  party  to  be  liable  as  acceptor  upon  a  bill  addressed  to 
another.  We  must  take  it  on  this  instrument  that  the 
defendant  is  different  from  the  party  to  whom  it  is 
addressed.  Polhill  v.  Walter,  3  B.  &  Ad.  114,  and  Jack- 
son V.  Hudson,  2  Campb.  447,  are  authorities  showing 
that  the  defendant  here  cannot  be  sued  as  acceptor.  In 
Jackson  v.  Hudson,  Lord  Ellenborough  treated  an  accept. 
ance  by  a  party  not  addressed  as  '  contrary  to  the  usage  and 
custom  of  merchants.' 


DAVIS   V.  CLARKE.  47 

Patteson,  J. — No  previous  case  seems  to  be  exactly- 
like  this.  In  Jackson  v.  Hudson,  2  Campb.  447,  there  was 
one  acceptance  by  the  party  to  whom  the  bill  was  addressed, 
prior  to  the  acceptance  by  the  defendant.  In  Gray  v. 
Milner,  8  Taunt.  739,  no  party  was  named  in  the  address; 
and  I  must  say  that  the  decision  in  that  case  appears  to 
me  to  go  to  the  extremity  of  what  is  convenient.  It  may 
be  considered  as  having  been  decided  on  the  ground  that 
the  acceptance  was  not  inconsistent  with  the  address,  so 
that  the  acceptor  might  be  deemed  to  have  admitted  him- 
self to  be  the  party  addressed.  But  here  another  person, 
the  drawer  himself,  is  named  in  the  address.  I  do  not 
know  that  a  party  may  not  address  a  bill  to  himself,  and 
accept,  though  the  proceeding  would  be  absurd  enough. 
Then  it  is  said  that  the  defendant  is  estopped;  but  that 
cannot  be  supported  where  the  instrument  shows,  on  its 
face,  that  he  cannot  be  the  acceptor. 

Williams,  J.  —  The  only  question  is,  whether  the 
defendant  is  such  an  acceptor  as  is  described  in  the  decla- 
ration; that  is,  of  a  bill  of  exchange  directed  to  him.  No 
doubt  this  can  be  so  only  where  he  is  the  drawee;  but 
here  the  bill  is  not  addressed  to  the  defendant  at  all. 
This  is  therefore  not  an  acceptance  within  the  custom  of 
merchants. 

Coleridge,  J.  —  The  safe  course  is  to  adhere  to  the  mer- 
cantile rule  that  an  acceptance  can  be  made  only  by  the 
party  addressed,  or  for  his  honor.  Here  the  last  is  not 
pretended,  and  the  first  cannot  be  presumed.  If  the  John 
Hart  addressed  is  different  from  the  John  Hart  who  draws, 
there  is  still  no  acceptance;  if  the  same,  then  the  instru- 
ment is  a  promissory  note,  and  not  a  bill  of  exchange. 

Rule  discharged. 


48  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

SPEAR   V.  PRATT. 

Supreme  Court  of  New  York,  May,  1842.     2  Hill,  582. 

If  the  drawee  of  a  bill  of  exchange  write  his  name  across  the  face  of 
the  bill,  this  binds  him  as  an  acceptor,  though  statute  requires  acceptance 
to  be  in  writing,  and  signed  by  the  acceptor  or  his  agent. 

Assumpsit  against  the  drawee  as  acceptor  of  a  bill  of 
exchange,  the  drawee  having  simply  written  his  name 
across  the  instrument.  The  statutes  of  New  York,  which 
govern  the  case,  require  acceptance  to  be  in  writing  and 
signed  by  the  acceptor.  Judgment  for  the  plaintiff  by 
direction  of  the  judge.     Motion  for  a  new  trial. 

Co  WEN,  J.,  for  the  court.  —  Any  words  written  by  the 
drawee  on  a  bill,  not  putting  a  direct  negative  upon  its 
request,  as  '  accepted, '  '  presented, '  '  seen, '  the  day  of  the 
mouth,  or  a  direction  to  a  third  person  to  pay  it,  is  prima 
facie  a  complete  acceptance,  by  the  law  merchant.  Bayley 
on  Bills,  163,  Am.  ed.  of  1836,  and  the  cases  there  cited. 
Writing  his  name  across  the  bill,  as  in  this  case,  is  a  still 
clearer  indication  of  intent,  and  a  very  common  mode  of 
acceptance.  This  is  treated  by  the  law  merchant  as  a 
written  acceptance,  —  a  signing  by  the  drawee.  '  It  may 
be,'  says  Chitty,  'merely  by  writing  his  name  at  the 
bottom  or  across  the  bill; '  and  he  mentions  this  as  among 
the  more  usual  modes  of  acceptance.  Chit,  on  Bills,  320, 
Am.  ed.  of  1839. 

It  is  supposed  that  the  rule  has  been  altered  by  1  Rev. 
St.  757,  2d  ed.  §  6.  This  requires  the  acceptance  to  be  in 
writing,  and  signed  by  the  acceptor  or  his  agent.  The 
acceptance  in  question  was,  as  we  have  seen,  declared  by 
the  law  merchant  to  be  both  a  writing  and  signing.  The 
statute  contains  no  declaration  that  it  should  be  considered 
less.  An  indorsement  must  be  in  writing  and  signed  ;  yet 
the  name  alone  is  constantly  holden  to  satisfy  the  requisi- 
tion.    No  particular  form  of  expression  is  necessary  in  any 


EXCHANGE  BANK  OF  ST.  LOUIS  v.  RICE.  49 

contract.  The  customary  import  of  a  word,  by  reason  of  its 
appearing  in  a  particular  place  and  standing  in  a  certain 
relation,  is  considered  a  written  expression  of  intent  quite 
as  full  and  effectual  as  if  pains  had  been  taken  to  throw 
it  into  the  most  labored  periphrase.  It  is  said  the 
revisors,  in  their  note,  refer  to  the  French  law  as  the  basis 
of  the  legislation  which  they  recommended;  and  that  the 
French  law  requires  more  than  the  drawee's  name,  —  the 
word  accejjted,  at  least.  That  may  be  so;  but  it  is  enough 
for  us  to  see  that  both  the  terms  and  the  spirit  of  the  act 
may  be  satisfied  short  of  that  word,  and  more  in  accordance 
with  the  settled  forms  of  commercial  instruments  in  analo- 
gous cases.  The  whole  purpose  was  probably  to  obviate 
the  inconveniences  of  the  old  law,  which  gave  effect  to  a 
parol  acceptance.  New  trial  denied. 


EXCHANGE   BANK   OF    ST.    LOUIS   v.  RICE. 

Supreme  Court  of  Massachusetts,  March,  1871.     107  Mass.  37. 

(See  98  Mass.  288.) 

No  action  can  be  maintained  upon  a  promise  to  accept  a  bill  of  ex- 
change by  one  who  has  purchased  the  bill  before  he  knew  of  the  promise. 

A  promise  to  accept  made  to  the  drawer,  not  acting  for  the  holder,  does 
not  extend  to  the  holder. 

Appeal  from  a  judgment  for  the  defendant  in  contract  on 
the  following  agreed  statement  of  facts : 

'  On  March  8,  1865,  eTohn  P.  Hill,  at  St.  Louis,  drew  on 
the  defendants,  commission  merchants  in  Boston,  a  draft 
for  $3,300,  payable  thirty  days  after  date  to  the  order  of 
E.  E.  Pitman  &  Co.,  and  containing  on  its  face  a  memo- 
randum in  the  terms  following:  "  against  12  bales  cotton." 
On  the  same  day  the  draft  was  indorsed  to  and  discounted 
in  the  usual  course  of  business  by  the  plaintiffs,  and  on 
March  15  was  presented  by  them  to  the  defendants,  at 
Boston,  who  caused  it  to  be  noted  for  non-acceptance.  On 
March  8  Hill  wrote  to  the  defendants  as  follows :  "  I  ship 

4 


50  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

you  to-day  per  Merritt's  Express  12  bales,  weighing  5,489 
pounds,  on  which  I  have  drawn  on  you  at  30  days  for 
$3,300."     To  this  letter  the  defendants  replied  on  March 

14  as  follows :  "  We  now  have  the  pleasure  to  acknowledge 
your  favor  of  the  8th.  Your  shipment  12  bales  cotton  per 
Merritt's  Express  will  receive  due  attention.  Bill  of 
lading  not  at  hand.  Your  draft  for  $3,300  is  excessive, 
particulaidy  as  we  shall  have  no  margin  on  previous  ship- 
ments, as  the  market  now  looks.  We  will  honor  the 
same,  but  shall  expect  you,  on  receipt  of  this,  to  make  us 
shipment  of  cotton  to  cover  the  margin."     And  on  March 

15  they  again  wrote  to  Hill  as  follows :  "  Market  for  cotton 
continues  weak.  Have  no  bill  lading  12  bales  reported  as 
shipped  yesterday,  and  we  have  felt  obliged  therefore  to 
have  your  draft  for  $3,300  noted  for  non-acceptance. 
When  bill  lading  is  received,  will  accept  draft."  The 
said  bill  of  lading  of  the  cotton  ran  to  the  defendants  or 
order,  and  was  received  by  them  March  17,  1865. 

'  The  defendants'  letter  of  March  15  was  shown  to  the 
plaintiffs  by  R.  R.  Pitman  &  Co.,  March  22,  1865.  The 
plaintiffs  thereupon  procured  said  letter,  and  the  duplicate 
bill  of  lading,  of  Pitman  &  Co.,  and  on  March  27  again 
presented  the  draft,  with  the  defendants'  said  letter  and 
the  duplicate  bill  of  lading  attached,  to  the  defendants  for 
acceptance.  But  the  defendants  declined  to  accept  the 
same,  and  afterwards  declined  to  pay,  and  they  have  never 
paid  the  same  or  any  part  thereof,  and  the  same  was  duly 
protested  for  non-acceptance  and  non-payment.  The  twelve 
bales  of  cotton  were  received  by  the  defendants  on  April  17, 
and  were  sold  by  them  on  April  21  for  $1,349  net,  which 
sum  they  credited  in  their  account  with  Hill,  upon  which 
a  balance  then  was  and  still  is  due  to  the  defendants.' 

Gray,  J.,  for  the  court.  — It  has  already  been  decided 
in  this  case,  upon  proof  of  substantially  the  same  facts 
which  are  now  agreed  by  the  parties,  that  the  plaintiffs 
could  not  sue  the  defendants   as  acceptors  of   the   draft, 


EXCHANGE  BANK   OF   ST.  LOUIS   v.  RICE.  51 

because  their  promise  to  the  drawer  to  accept  it,  having 
been  made  after  the  draft  had  been  negotiated  to  the  plain- 
tiffs, did  not  amount  to  an  acceptance;  and  the  memoran- 
dum at  the  foot  of  the  draft,  tliat  it  was  drawn  against 
twelve  bales  of  cotton,  could  have  no  more  effect  to  charge 
the  defendants  as  acceptors  than  the  mere  signature  of  the 
drawer,  which  of  itself  always  imports  a  promise  that  he 
will  have  funds  in  the  hands  of  the  drawee  to  meet  the 
draft.     98  Mass.  288. 

The  defendants'  promise  to  the  drawer  to  accept  the 
draft  was  a  mere  chose  in  action,  not  negotiable,  and  upon 
which  no  one  but  he  to  whom  it  was  made  could  maintain 
an  action.  Worcester  Bank  v.  Wells,  8  Met.  107;  Luff  v. 
Pope,  5  Hill,  413,  and  7  Hill,  577. 

The  general  rule  of  law  is,  that  a  person  who  is  not  a 
party  to  a  simple  contract,  and  from  whom  no  considera- 
tion moves,  cannot  sue  on  the  contract,  and  consequently 
that  a  promise  made  by  one  person  to  another,  for  the 
benefit  of  a  third  person  who  is  a  stranger  to  the  consider- 
ation, will  not  support  an  action  by  the  latter.  And  the 
recent  decisions  in  this  Commonwealth  and  in  England 
have  tended  to  uphold  the  rule  and  to  narrow  the  excep- 
tions to  it. 

The  unguarded  expressions  of  Chief  Justice  Shaw  in 
Carnegie  v.  Morrison,  2  JNIet.  381.  and  Mr.  Justice 
Bigelow  in  Brewer  v.  Dyer,  7  Cush.  337,  to  the  contrary, 
on  which  the  learned  counsel  for  the  plaintiffs  relied  at 
the  argument,  were  afterwards,  and  while  those  two  dis- 
tinguished judges  continued  to  hold  seats  upon  this  bench, 
qualified,  the  limits  of  the  doctrine  defined,  and  a  disin- 
clination repeatedly  expressed  to  admit  new  exceptions  to 
the  general  rule,  in  unanimous  judgments  of  the  court, 
drawn  up  by  Mr.  Justice  IMetcalf.  and  marked  by  his 
characteristic  legal  learning  and  cautious  precision  of  state- 
ment. Mellen  v.  Whipple,  1  Gray,  317;  Millard  v.  Bald- 
win, 3  Gray,  484;  Field  v.  Crawford,  6  Gray,  116;  Dow  v. 
Clark,  7   Gray,  198.    Those  judgments   have    since   been 


52  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

treated  as  settling  the  law  of  Massachusetts  upon  this 
subject.  Colburn  v.  Phillips,  13  Gray,  64;  Flint  v. 
Pierce,  99  Mass.  68. 

The  first  and  principal  exception  stated  by  Mr,  Justice 
Metcalf  to  the  general  rule  consists  of  those  cases  in 
which  the  defendant  has  in  his  hands  money  which  in 
equity  and  good  conscience  belongs  to  the  plaintiff,  as 
where  one  person  receives  from  another  money  or  property 
as  a  fund  from  which  certain  creditors  of  the  depositor 
are  to  be  paid,  and  promises,  either  expressly,  or  by 
implication  from  his  acceptance  of  the  money  or  property 
without  objection  to  the  terms  on  which  it  is  delivered  to 
him,  to  pay  such  creditors.  That  class  of  cases,  as  was 
pointed  out  in  1  Gray,  322,  includes  Carnegie  v.  Morrison 
and  most  of  the  earlier  cases  in  this  Commonwealth,  as 
well  as  the  later  cases  of  Frost  v.  Gage,  1  Allen,  262,  and 
Putnam  v.  Field,  103  jNIass.  556. 

The  only  illustration  which  the  decisions  of  this  court 
afford  of  Mr.  Justice  Metcalf's  second  class  of  excep- 
tions is  Felton  v.  Dickinson,  10  Mass.  287,  in  which  it 
was  held,  in  accordance  with  a  number  of  early  English 
authorities,  and  hardl}^  argued  against,  that  a  son  might 
sue  upon  a  promise  made  for  his  benefit  to  his  father. 
Those  cases,  with  the  proposition  on  which  they  have 
sometimes  been  supposed  to  rest,  that,  by  reason  of  the 
near  relation  between  parent  and  child,  the  latter  might  be 
thought  to  have  an  interest  in  the  consideration  and  the 
contract,  and  the  former  to  have  entered  into  the  contract 
as  his  agent,  are  not  now  law  in  England.  Tweddle  v. 
Atkinson,  1  B.  «&  S.  393;  Addison  on  Con.  (6th  ed.)  1040; 
Dicey  on  Parties,  84.  And  this  case  does  not  require  us 
to  consider  whether  they  ought  still  to  be  followed  here. 

The  third  exception  admitted  by  Mr.  Justice  ]\[etcalf 
is  the  case  of  Brewer  v.  Dyer,  7  Cush.  337,  in  which  the 
defendant  made  a  written  promise  to  the  lessee  of  a  shop 
to  take  his  lease  (which  was  under  seal)  and  pay  the  rent 
to  the  lessor  according  to  its  terms,  entered  into  posses- 


EXCHANGE   BANK   OF   ST.  LOUIS   v.  RICE.  53 

sion  of  the  shop  with  the  lessor's  knowledge,  paid  him  the 
rent  quarterly  for  a  year,  and  then  before  the  expiration 
of  the  lease  left  the  shop,  and  was  held  liable  to  an  action 
by  the  lessor  for  the  rent  subsequently  accruing.  That 
case  may  perhaps  be  supported  on  the  ground  that  such 
payment  and  receipt  of  the  rent,  after  the  agreement 
between  the  defendant  and  the  lessee,  warranted  the  infer- 
ence of  a  direct  promise  by  the  defendant  to  the  lessor  to 
pay  the  rent  to  him  for  the  residue  of  the  term.  See 
McFarlan  v.  Watson,  3  Comst.  286.  It  certainh'  cannot 
be  reconciled  with  the  later  authorities  without  limiting 
it  to  its  own  special  circumstances,  and  affords  no  safe 
guide  in  the  decision  of  the  present  case. 

The  plaintiffs  are  then  obliged  to  fall  back  upon  the  first 
exception  to  the  general  rule.  But  they  fail  to  bring  their 
case  within  that  exception  or  within  any  of  the  authorities 
to  which  they  have  referred  us. 

In  Carnegie  v.  Morrison,  2  Met,  281,  the  defendants,  hav- 
ing funds  in  cash  or  credit  of  the  plaintiffs'  debtor,  gave 
him  a  letter  of  credit,  which  was  shown  to  the  plaintiffs, 
and  on  the  faith  of  which  they  drew  the  bill  for  the  amount 
of  which  they  sued  the  defendants  ;  and  the  drawing  of 
that  bill,  whereby  they  made  themselves  liable  to  the 
drawee^  thereof,  was  a  consideration  moving  from  them. 
In  Lilly  v.  Hays,  5  Ad.  &  E.  548 ;  s.  c.  1  Xev.  &  Per.  26, 
the  defendant,  as  the  jury  found,  had  authorized  the  plain- 
tiff to  be  told  that  the  defendant  had  received  the  money 
to  his  use,  and  thus  promised  the  plaintiff  to  pay  it  to  him. 
So  in  Walker  v.  Eostron,  9  M.  &  W.  411,  the  defendant  hatl 
promised  the  plaintiff  to  pay  the  sum  in  question.  And  the 
rule  established  by  the  modern  cases  in  England,  as  laid 
down  in  the  text  books  cited  for  the  plaintiffs,  does  not 
permit  the  person  for  whose  benefit  a  promise  is  made  to 
another  person  from  whom  the  only  consideration  moves  to 
maintain  an  action  against  the  promisor,  unless  the  latter 
has  also  made  an  express  promise  to  the  plaintiff,  or  the 

^  A  slip  for  payee. 


54  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

promisee  acted  as  the  plaintiff's  agent  merely.  Met.  Con. 
209 ;  Addison  on  Con.  (6th  ed.)  630,  1041 ;  Chit.  Con.  (8tli 
ed.)  53.  Where  the  promisee  is  in  fact  acting  as  the  agent 
of  a  third  person,  although  that  is  unknown  to  the  promisor, 
the  principal  is  the  real  party  to  the  contract,  and  may 
therefore  sue  in  his  own  name  on  the  promise  made  to 
his  agent.  Sims  v.  Bond,  5  B.  &  Ad.  389;  s.  c.  2  Nev.  & 
Man.  608  ;  Huntington  v.  Knox,  7  Cush.  371 ;  Barry  v.  Page, 
10  Gray,  398  ;  Hunter  v.  Giddings,  97  Mass.  41 ;  Ford  v. 
Williams,  21  How.  287. 

In  the  case  at  bar  the  plaintiffs  had  acquired  no  title  in 
the  cotton  against  which  the  draft  was  drawn.  The  bill  of 
lading  was  not  attached  to  the  draft,  or  made  payable  to 
the  holder  thereof,  or  delivered  to  the  plaintiffs.  The  case 
is  thus  distinguished  from  Allin  v.  Williams,  12  Pick.  297, 
and  Michigan  State  Bank  v.  Gardner,  15  Gray,  362,  cited 
at  the  argument.  The  cotton  was  not  of  sufficient  value  to 
pay  the  draft,  and  the  balance  of  account  between  the  defend- 
ants and  the  drawer,  at  the  time  of  their  receipt  and  sale  of 
the  cotton,  and  ever  since,  was  in  favor  of  the  defendants. 
There  is  no  ground,  therefore,  for  implying  a  promise 
from  the  defendants  to  the  plaintiffs  to  pay  to  them  either 
the  amount  of  the  draft  or  the  proceeds  of  the  cotton. 
Tiernan  v.  Jackson,  5  Pet.  580 ;  Cowperthwaite  v.  Sheffield, 
1  Sandf .  416,  and  3  Comst.  243 ;  Winter  v.  Drury,  1  Selden, 
525 ;  Yates  v.  Bell,  3  B.  &  Aid.  643.  The  plaintiffs  did  not 
take  the  draft,  or  make  advances,  upon  the  faith  of  any 
promise  of  the  defendants,  or  of  any  actual  receipt  by  them 
of  the  cotton  or  the  bill  of  lading,  but  solely  upon  the  faith 
of  the  drawer's  signature  and  implied  promise  that  the  de- 
fendants should  have  funds  to  meet  the  draft.  The  whole 
consideration  for  the  defendants'  promise  moved  from  the 
drawer,  and  not  from  the  plaintiffs.  And  the  defendants 
made  no  promise  to  the  plaintiffs.  Their  only  promise  to 
accept  the  draft  was  made  to  Hill,  the  drawer,  after  the 
draft  had  been  negotiated  to  the  plaintiffs  ;  and  there  is  no 
proof  that  the  defendants  authorized  that  promise  to  be 


EXCHANGE  BANK  OF  ST.  LOUIS  v.  RICE,  55 

shown  to  the  plaintiffs,  or  that  Hill,  to  whom  that  promise 
was  made,  was  an  agent  of  the  plaintiffs.  His  relation  to 
them  was  that  of  drawer  and  payee,  not  of  agent  and  prin- 
cipal. To  infer,  as  suggested  in  behalf  of  the  plaintiffs,  that 
he  was  their  agent  in  receiving  the  defendants'  promise,  so 
that  they  might  sue  thereon  in  their  own  name,  would  be 
unsupported  by  any  facts  in  the  case,  and  would  be  an  eva- 
sion of  the  rules  of  law,  which  will  not  allow  any  person 
who  took  the  draft  before  that  promise  was  made  to  main- 
tain an  action  upon  that  promise  either  as  an  acceptance  or 
a  promise  to  accept.  Judgment  for  the  defendants. 

In  many  of  the  States  one  for  whose  benefit  a  promise  is  made 
may  sue  upon  it  though  he  was  not  privy  to  the  promise  or  to  the 
consideration.  But  that,  in  so  far  as  it  is  received  doctrine,  is 
received  as  doctrine  of  the  common  law,  and  not,  it  is  appre- 
hended, as  doctrine  of  the  law  merchant  applicable  to  cases  like 
that  supra.  And  in  any  event  the  promise  so  treated  would  not  be 
treated,  further,  as  negotiable. 

One's  rights  may,  generally  speaking,  be  transferred  to  another; 
but  the  right  of  the  drawer  of  a  bill  of  exchange  or  of  a  cheque  to 
have  his  draft  honored,  where  he  has  such  a  right,  cannot  be  trans- 
ferred with  the  draft  to  the  holder  of  the  same ;  otherwise  there 
would  be  nothing,  or  next  to  nothing,  in  the  rule  of  the  law  mer- 
chant that  the  drawee  of  a  bill  or  cheque  is  and  can  be  under  no 
liability  to  the  holder  (apart  from  a  sufficient  promise  to  him  to 
accept)  until  he  has  accepted  the  one  or  certified  the  other.  Nor 
can  the  circumstance  that  the  drawee  may  have  promised  the 
drawer  that  he  will  honor  the  draft  make  any  difference,  where  tlie 
drawer  is  not  an  agent  of  the  holder  ;  for  in  the  case  supposed  he 
was  bound  to  honor  the  draft,  so  that  the  promise  has  added  noth- 
ing to  the  case. 

Of  course  this  is  not  saying  that  this  particular  right  of  the 
drawer  may  not  pass  to  an  assignee  in  bankruptcy  or  insolvency ; 
that  is  a  very  different  thing. 


56  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

HENEIETTA  NATIONAL  BANK  v.    STATE 
NATIONAL  BANK. 

Supreme  Court  of  Texas,  189L     80  Texas,  648. 

To  maintain  an  action  upon  a  promise  to  pay  a  cheque  the  promise  need 
not  be  made  upon  a  full  and  perfect  description  ;  enough  that  the  cheque 
comes  fairly  within  the  scope  of  the  promise. 

Distinction  between  acceptance  of  and  promise  to  accept  a  bill  of 
exchange. 

Action  on  a  promise  to  pay  a  cheque. 

Gaixes,  Assoc.  Justice,  for  the  court.  —  This  suit  was 
brought  by  the  appellee  to  recover  of  the  Henrietta  National 
Bank  and  Frank  Brown,  as  its  receiver,  the  amount  of  a 
cheque  drawn  upon  it  by  E.  F.  and  W.  S.  Ikard. 

On  the  22d  of  July,  1887,  E.  F.  and  W.  S.  Ikard  drew  a 
cheque  on  the  defendant  bank  in  favor  of  one  T.  F.  West 
for  Ji>l,800.  West  indorsed  and  delivered  it  to  one  Atkin- 
son, who  on  the  next  day  presented  it  to  the  cashier  of  the 
plaintiff  bank  at  Fort  Worth  with  the  request  that  he  cash 
it.  The  cashier  immediately  telegraphed  the  defendant 
bank  as  follows:  'Will  you  pay  E.  F.  and  W.  S.  Ikard's 
cheque  for  $1,800  on  presentation  ? '  The  cashier  of  the 
defendant  bank  on  the  same  day  replied  by  telegram, 
*  Yes ;  will  pay  the  Ikard  cheque.'  Upon  the  receipt  of  this 
telegram  the  plaintiff  discounted  the  paper,  and  the  holder 
transferred  it  to  the  bank  by  indorsement  and  delivery. 
The  cheque  was  immediately  sent  by  mail  to  the  defendant 
bank  with  a  request  to  remit  the  amount  to  the  plaintiff. 
The  letter  reached  Henrietta  on  Sunday,  and  on  ]\Ionday 
before  banking  hours  the  directors  of  the  defendant  bank 
determined  to  suspend  payment,  and  thereafter  its  doors 
were  not  openetl  for  regular  business. 

The  court  having  given  judgment  for  the  plaintiff  for  the 
full  amount  of  the  cheque  and  interest,  and  the  defendants 
having  appealed,  they  now  complain  in  effect  that  the  cor- 
respondence by  telegraph  between  the  two  banks  did  not 


HENRIETTA  NATIONAL  BANK  v.  STATE,  ETC.  o7 

sufficiently  describe  the  cheque  so  as  to  make  the  promise 
of  the  defendant  bank  an  acceptance.  The  authority  mainly 
relied  upon  by  appellants'  counsel  in  support  of  their  con- 
tention is  the  case  of  Coolidge  v.  Payson,  2  Wheat.  66.  In 
that  case  Chief  Justice  Marshall  says  :  '  Upon  a  review  of 
the  cases  which  are  reported  this  court  is  of  opinion  that  a 
letter  written  within  a  reasonable  time  before  or  after  the 
date  of  a  bill  of  exchange,  describing  it  in  terms  not  to  be 
mistaken  and  promising  to  accept  it,  is,  if  shown  to  the 
person  who  afterwards  takes  the  bill  on  the  credit  of  the 
letter,  a  virtual  acceptance  binding  the  person  who  makes 
the  promise.'  The  doctrine  was  re-affirmed  in  the  same 
court  in  the  cases  of  Schimmelpennick  v.  Bayard,  1  Pet. 
284,  and  Boyce  v.  Edwards,  4  Pet.  Ill,  and  has  been 
frequently  followed  in  other  courts.  Whether  according  to 
the  rules  laid  down  the  correspondence  should  show  any 
more  than  the  amount  and  character  of  the  bill  as  to  the 
time  of  payment  we  need  not  here  inquire,  though  it  would 
seem  that  such  a  description  ought  to  be  sufficient  accord- 
ing to  the  most  rigid  rule  recognized  by  any  court. 

The  rule,  however,  applies  only  to  a  case  in  which  it  is 
sought  to  charge  the  defendant  as  the  acceptor  of  the  bill. 
Cases  may  arise  in  which  the  party  who  has  promised  to 
accept  may  be  held  liable  upon  the  promise,  although  such 
promise  may  not  be  deemed  equivalent  to  a  formal  accept- 
ance. A  practical  difference  between  an  action  upon  an 
acceptance  and  one  upon  a  promise  to  accept  is  that  the 
former  may  be  brought  b}"  the  holder  of  the  bill,  while  the 
latter  suit  can  only  be  maintained  by  the  party  to  whom 
the  promise  is  made.  In  this  case  the  promise  to  pay  the 
bill  ^  was  made  directly  to  the  plaintiff,  and  it  was  upon  the 
faith  of  that  promise  that  the  cheque  was  discounted.  The 
suit  is  not  brought  upon  an  alleged  acceptance.  The  peti- 
tion states  the  facts  in  detail  and  seeks  a  recovery  for  the 
breach  of  the  promise  to  pay  the  cheque.  In  Boyce  v. 
Edwards,  supra,  the  Supreme  Court  of  the  United  States 

1  A  slip,  it  seems,  for  cheque. 


oS  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

says :  '  The  distiuction  between  an  action  on  a  bill  as  an 
accepted  bill  and  one  founded  on  a  breach  of  promise  to 
accept  seems  not  to  have  been  adverted  to.  But  the  evi- 
dence to  support  the  one  or  the  other  is  materially  ditferent. 
To  maintain  the  former,  as  has  already  been  shown,  the 
promise  must  be  applied  to  the  particular  bill  alleged  in  the 
declaration  to  have  been  accepted.  In  the  latter  the  evi- 
dence may  be  of  a  more  general  character,  and  the  author- 
ity to  draw  may  be  collected  from  circumstances  and 
extended  to  all  bills  coming  fairly  within  the  scope  of  the 
promise.'  It  is  clear  that  the  promise  in  the  case  before  us 
was  sufficiently  definite  to  support  an  action  for  a  failure  or 
refusal  to  pay  tlie  cheque  described  in  the  petition,  if  not 
sufficiently  specific  to  authorize  its  being  treated  as  an 
acceptance. 

The  cheque  offered  in  evidence  contained  the  character 
and  figures  '  $1,800.00,'  but  in  the  body  a  line  appeared  to 
have  been  drawn  through  the  word  '  hundred.'  If  the  word 
was  intended  to  be  erased,  it  was  a  cheque  for  $18  only; 
if  not,  it  was  a  cheque  for  $1,800.  The  line  appears  to  have 
been  drawn  along  the  top  of  the  word,  rather  than  through 
it,  and  it  is  not  at  all  clear  that  even  without  explanation  it 
should  be  held  to  be  an  erasure.  The  uiember  of  the  firm 
who  drew  the  cheque  testified  that  it  was  intended  to  be  a 
cheque  for  $1,800,  and  that  he  tliought  the  line  was  upon 
the  blank  when  the  cheque  was  written.  The  circumstances 
attending  the  whole  transaction  leave  no  doubt  that  the 
purpose  was  to  draw  a  cheque  for  the  amount  claimed  by 
the  plaintilf,  and  that  the  line  was  either  upon  the  paper 
when  the  cheque  was  drawn  and  was  not  discovered,  or  that 
it  was  subsequently  placed  there  by  some  accident.  That  it 
was  competent  to  prove  that  a  mark  of  this  character  was 
not  intended  as  an  erasure,  especially  when  the  figures  in 
the  margin  tend  to  show  the  same  fact,  we  have  no  doubt. 
Sharswood's  Starkie  on  Ev.  500.  The  defendants  intro- 
duced testimony  tending  to  show  that  a  prudent  banker 
would  not  have  paid  the  cheque,  at  least  without  inquiry 


CAREW   V.  DUCKWORTH.  59 

as  to  the  intention  of  the  drawers  in  executing  it.  This 
may  be  true,  but  so  far  as  this  case  is  concerned  it  is  a  fact 
of  no  importance.  It  was  nevertheless  the  duty  of  the 
defendant  bank  to  pay  the  cheque.  An  inquiry  would  have 
shown  beyond  doubt  that  it  was  a  cheque  for  $1,800,  and 
though  the  apparent  erasure  may  have  justified  a  delay  of  a 
reasonable  time  to  make  inquiry,  it  did  not  justify  a  final 
refusal  to  pay. 

We  find  no  error  in  the  judgment,  and  it  is 

Affirmed. 

CAEEW   V.   DUCKWORTH. 

Court  of  Exchequer  of  England,  Trinity,  1869.     L.  R.  4  Ex.  313. 

Notice  of  dishonor  need  not  be  given  to  the  drawer  of  a  cheque  having 
no  sufficient  effects  in  the  hands  of  the  drawee  to  meet  the  cheque,  and  no 
reasonable  ground  to  expect  that  the  cheque  will  be  paid.  Meaning  of 
'sufficient  effects'  and  '  reasonable  ground.' 

Declaration  by  plaintiff  as  holder  of  the  defendant's 
cheque  on  the  Agra  Bank,  Limited,  for  £30,  averring  due 
presentment  and  non-payment,  and  excusing  notice  of  dis- 
honor on  the  ground  that  the  bank  *  had  not  in  their  hands 
sufficient  or  any  effects  of  the  defendant  for  payment  of  the 
said  cheque  or  order,  nor  had  they  received  any  considera- 
tion for  the  payment  by  them  of  the  said  cheque  or  order, 
nor  had  the  defendant  at  any  time  any  reasonable  ground  to 
expect  that  the  said  Agra  Bank,  Limited,  would  pay  the 
said  cheque  or  order,  nor  has  the  defendant  sustained  any 
damage  by  reason  of  not  having  notice  of  the  non-payment  by 
the  said  Agra  Bank,  Limited,  of  the  said  cheque  or  order.'  ^ 

Plea  traversing  the  averments  excusing  notice.     Issue. 

It  was  proved  that  the  cheque  was  given  after  banking 
hours  on  the  25th  of  February,  and  it  was  then  agreed  that 

1  The  presumptive  duty  to  notify  the  drawer  of  a  cheque  of  its  (h'shonor 
should  be  noticed.  See  Chitty,  Precedents  in  Heading,  117,  3d  Eng.  ed., 
whose  form  is  followed  supra,  and  is  approved  in  Kemble  v.  Mills,  1  M. 
&  G.  757,  7G9 ;  Bills  and  Notes  (Students'  Series),  p.  53. 


GO  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

it  should  not  be  presented  for  several  days.  The  defendant 
then  had  £106  in  the  bank.  The  cheque  was  presented  on 
the  10th  of  March,  and  dishonored. 

On  the  morning  of  INIarch  2d  the  balance  in  the  defend- 
ant's favor  was  £18  17s.  2d. ;  in  the  course  of  the  day  £48 
6s.  8fZ.  was  paid  in,  and  £58  Ss.  '2d.  was  drawn  out,  leaving 
a  balance  of  £8  18s.  d>d. :  and  from  that  day  to  the  10th  of 
March  the  largest  sum  in  the  bank  to  the  defendant's  credit 
was  £9  8s.  4cZ.  On  the  10th  £107  was  paid  in,  and  £99 
drawn  out,  which  left  to  the  defendant's  ci'edit  a  balance  of 
£1 15s.  lid. 

It  was  also  proved  that  the  defendant  had  on  a  former 
occasion  overdrawn  his  account,  and  that  the  bank  had  there- 
upon given  him  notice  they  would  not  honor  overdrafts. 

The  jury  found  all  the  averments  of  the  declaration  in 
favor  of  the  plaintiff.  A  verdict  was  entered  for  the  plain- 
tiff, with  leave  to  the  defendant  to  enter  a  verdict  for  him. 
A  rule  having  been  obtained  accordingly,  and  for  a  new 
trial,  on  the  ground  that  the  verdict  was  against  evidence, 
the  cause  came  to  argument. 

Bramwell,  B.  —  I  cannot  think  that  the  law  on  this 
point  is  in  a  very  satisfactory  condition.  The  true  rule 
should  be,  that  no  notice  of  dishonor  is  required  where  it 
would  convey  no  information,  that  is,  when  the  party  sued 
knew  beforehand  that  the  bill  would  not  be  paid ;  but  that 
when  he  did  not  know,  it  is  right  that  he  should  be  in- 
formed of  the  non-payment.  If  this  rule  should  be  adopted, 
the  question  would  be,  did  he,  practically  speaking,  know 
beforehand  that  the  bill  would  not  be  honored  ?  This  may 
depend  upon  a  variety  of  circumstances ;  he  might  think 
that  the  cheque  would  be  honored  by  favor,  though  in  fact 
there  were  no  assets  to  meet  it.  But  though  this  ought  to 
be  the  rule,  at  all  events  in  the  case  of  cheques  (and  I  am 
not  sure  that  it  is  not  the  rule  in  fact),  yet  it  is  not  always  to 
be  found  laid  down  in  those  terms,  and  perhaps  it  could  not 
be  established  without  doing  violence  to  some  of  the  cases. 


CAREW   V.  DUCKWORTH.  61 

The  first  question,  then,  is,  had  the  defendant  funds  in  the 
hands  of  the  bank  to  meet  this  cheque  ?  Which  here  be- 
comes the  question,  whether  there  was  evidence  from  which 
the  jury  could  find  this  fact  in  the  negative.  The  defend- 
ant had  tlie  sum  of  £106  in  the  bank  at  the  time  when  he 
drew  the  cheque,  but  the  question  of  his  right  to  notice  of 
dishonor  must  be  considered  in  connection  with  his  request 
that  the  cheque  should  not  be  presented  for  several  days. 
Now  the  important  question  is,  whether  the  drawer  thinks 
that  there  will  be  funds  to  meet  the  draft,  whether  bill  or 
cheque,  when  it  is  presented  for  payment.  If  I,  in  London, 
draw  on  a  bank  in  York,  where  I  have  £1,000,  which  I  know 
will  be  drawn  out  to-day,  while  the  cheque  cannot  be  pre- 
sented till  to-morrow,  it  is  idle  to  say  that,  knowing  there 
will  be  no  funds  there  at  any  time  when  the  cheque  can  be 
presented,  I  am  entitled  to  notice  of  dishonor.  The  ques- 
tion therefore  is,  what  was  the  state  of  the  funds  at  the 
time  when  the  bill  ought  in  regular  course  to  have  been 
presented  ?  Then  the  question  arises,  what  is  the  meaning 
of  several  days  or  a  few  days  ?  The  jury  may  well  have 
thought  that  it  at  least  postponed  the  presentment  till  the 
2d  of  March.  Now  from  ]\Iarch  the  2d  till  the  10th,  when 
the  cheque  was  actually  presented,  there  was  not  at  any 
time  a  greater  sum  than  £9  8s.  -id.  available  for  its  pay- 
ment. There  was  evidence  in  the  accounts  to  show  that  the 
defendant  paid  in  money  to  his  account,  but  he  at  once 
drew  out  as  much  as  he  paid  in,  or  the  money  was  so  paid 
in  and  dealt  with  that  it  was  not  applicable  to  the  payment 
of  this  cheque.  This  was  evidence  on  which  the  jury  might 
find  that  the  defendant  had  not,  in  fact,  funds  in  the  bank 
at  the  time  when  the  bill  was  presented. 

But  Mr.  Sharpe  [for  the  defendant]  says,  that  if  there 
were  any  funds,  the  defendant  was  entitled  to  notice  of  dis- 
honor. This  cannot  be  so ;  the  question  must  be  whether, 
practically,  there  were  funds  to  such  an  amount  as  that  at 
the  time  of  drawing  he  could  reasonably  expect  payment. 
For  though  the  expression  '  any  funds  '  is  used  in  some 


62  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

cases,  it  is  preposterous  to  suppose  that,  because  there  was 
an  old  balance  of  £50  to  the  credit  of  a  customer,  he  would 
thereby  be  entitled  to  notice  of  dishonor  of  a  cheque  for 
£5,000.  The  question  then  must  be,  whether  there  were 
any  such  funds  as  the  drawer  might  reasonably  and  prop- 
erly draw  against,  with  an  expectation  that  the  draft  would 
be  honored.  We  may  read  the  allegations  in  the  declaration 
that  the  defendant  had  not  sufficient,  nor  any,  funds  for  the 
payment  of  the  cheque,  as  meaning  that  he  had  no  funds 
adequate  for  its  payment,  no  funds  against  which  he  was 
entitled  to  draw  the  cheque  in  question.  Therefore,  as  to 
this  first  question,  I  think  there  was  evidence  for  the  jury 
that  there  were  no  such  funds  in  hand,  from  the  time  when 
the  defendant  would  expect  the  cheque  to  be  presented  up 
to  the  time  when  it  was  presented  in  fact,  as  to  give  him 
ground  to  suppose  that  the  cheque  would  be  honored  ;  and 
I  think  that  this  fact  was  rightly  so  found.  Secondly,  it  is 
quite  plain  that  there  was  evidence  for  the  jury  that  the 
defendant  had  no  reason  to  expect  that  the  cheque  would 
be  honored ;  and  I  also  think  that  they  were  right  in  so 
finding.  There  were  eight  entire  days  after  the  time  when 
the  defendant  might  first  expect  the  cheque  to  be  presented, 
on  none  of  which  had  he  any  reason  to  expect  that  it  would 
be  paid,  for  he  had  no  right  to  expect  that  any  cheque  woidd 
be  paid  which  he  had  not  sufficient  effects  to  meet. 

Chaxxell,  B,  — I  am  of  the  same  opinion.  There  is  no 
ground  for  saying  either  that  the  verdict  was  against  evi- 
dence, or  that  there  was  no  evidence  to  go  to  the  jury  in 
support  of  the  declaration.  The  evidence  was  that  the 
cheque  was  not  to  be  presented  for  a  few  days ;  the  jury 
have  found  that  when  it  was  presented  a  reasonable  time 
had  elapsed  ;  and  I  think  they  were  warranted  in  so  finding. 
There  had  been  then  eight  days  during  which  there  Avere 
no  funds  in  the  hands  of  the  bank  to  meet  the  cheque. 
There  is  therefore  no  ground  to  contend  that  the  defendant 
had  a  reasonable  expectation  of  the  cheque  being  paid ;  and 


CAREW   V.  DUCKWORTH.  63 

the  case  bears  no  resemblance  to  cases  where  funds  might 
be  expected  to  come  in,  —  as,  for  instance,  in  the  case  of  a 
landlord  whose  tenants  were  accustomed  to  pay  their  rents 
into  the  bank,  and  who  had  therefore  a  right  to  expect  there 
Avould  be  assets  to  meet  his  draft,  and  might  perhaps,  for 
want  of  notice,  lose  his  opportunity  of  recovering  rent  by 
distress. 

Cleasby,  B.  —  I  am  also  of  the  same  opinion.  The  issue 
is  distinct,  and  involves  the  question  whether  the  defendant 
had  reasonable  ground  for  expecting  that  the  cheque  would 
be  paid.  That  this  is  a  material  question  appears  from 
Kemble  v.  Mills,  1  M.  &  G.  757,  761,  where  the  declaration 
being  objected  to,  Tindal,  C.  J.,  says  :  '  I  suppose  the  objec- 
tion is,  that  it  is  not  stated  that  the  defendant  had  no 
reason  to  expect  that  the  bill  would  be  paid ; '  this  shows 
(though  the  declaration  was  in  that  case  held  sufficient) 
that  the  allegation  of  want  of  reasonable  ground  for  the 
expectation  of  payment  is  an  important  and  a  necessary 
averment,  and  is  therefore  an  essential  matter  for  consider- 
ation. The  existence  of  such  reasonable  ground  must 
obviously  be  a  question  for  the  jury.  Xow,  here  the  cheque 
was  given  with  a  request  that  it  should  not  be  presented  for 
a  few  days ;  but  it  is  nevertheless  said  that  if  at  the  time  of 
drawing  it  there  were  funds  the  drawer  is  entitled  to  notice 
of  dishonor.  But  can  it  be  said  that  after  a  cheque  has  been 
given  with  such  a  request,  and  its  drawer  next  day  draws 
out  the  whole  of  his  funds,  and  never  afterwards  pays  in  a 
farthing,  nor  has  an}-  reasonable  expectation  of  funds  com- 
ing in,  so  that  he  must  well  know  that  there  never  can  be 
any  funds  to  meet  the  cheque,  he  is  not  completely  aware 
that  the  chequ.e  will  not  be  paid  in  fact  ?  Then  put  the 
case  of  a  small  sum  being  paid  in,  quite  insufficient  to 
satisfy  the  cheque,  the  question  will  still  be,  was  there  any 
reasonable  expectation  that  there  would  be  funds  to  meet 
the  cheque  ?  The  jury  have  found  that  the  defendant 
had  no  reasonable  expectation   that  the  cheque  would  be 


04  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

jjaid,  and   I   think   there  was    sufficient   ground   for   that 
finding. 

Bramwell,  B.  —  I  wish  to  add,  that  if  there  were  funds 
in  the  hands  of  the  bank  sufficient  to  meet  the  cheque,  the 
drawer  would  be  entitled  to  notice  though  he  knew  that 
the  bank  would  not  honor  the  cheque,  for  he  would  be 
entitled  to  say  they  were  bound  to  honor  it,  even  though 
they  had  told  him  they  would  not.  Rule  discharged. 


KINYON   V.   STANTON. 

Supreme  Court  of  Wisconsin,  January,  1878.     44  Wis.  479. 

If  neglect  on  the  part  of  the  holder  of  a  cheque  to  present  the  same 
within  the  usual  time  does  not  prejudice  the  drawer,  tiie  drawer  is  not 
thereby  discharged. 

Action  against  the  drawers  for  the  amount  of  a  cheque  on 
the  Corn  Exchange  Bank  of  AVaupun  in  favor  of  the  plain- 
tiff. The  cheque  was  never  presented  for  payment,  and 
some  eight  days  after  it  was  drawn  the  bank  closed  its 
doors ;  three  weeks  later  it  was  adjudged  bankrupt.  From 
the  time  the  cheque  was  drawn  until  the  bank  suspended 
payment  the  drawers  had  more  than  enough  money  in  the 
bank  to  meet  the  cheque.  The  cheque  might  have  been 
presented  in  the  interval ;  and  the  bank  would  then  have 
honored  it  down  to  the  day  of  closing,  even  without  regard 
to  the  state  of  the  defendant's  account.  Just  before,  and 
on  the  day  the  bank  suspended  payment,  the  defendants, 
having  heard  rumors  affecting  the  bank,  drew  out  all  their 
funds,  part  in  favor  of  themselves,  part  in  favor  of  another. 
The  defendants  some  days  later  refused  to  pay  the  cheque. 
For  the  sum  drawn  out  by  the  defendants  for  themselves 
an  action  was  afterwards  successfully  brought  by  the  bank's 
assignee,  in  the  federal  court. 

Judgment  for  the  plaintiff  for  the  full  sum;  defendants 
appealed. 


KINYON  V.  STANTON.  65 

Etan,  C.  J.,  for  the  court.  — Doubtless  the  respondent 
was  guilty  of  negligence  in  holding  the  cheque  of  the 
appellants  so  long  without  presenting  it  to  the  bank  for 
payment.  And  if  the  appellants  had  left  funds  in  the 
bank  to  meet  it  until  the  failure  of  the  bank,  the  negli- 
gence of  the  respondent  would  have  discharged  the  appel- 
lants from  all  liability  over.  Jones  v.  Heiliger,  36  Wis. 
149. 

But  the  appellants  saw  fit  to  draw  out  their  entire 
account  in  the  bank  before  its  failure ;  and  doing  so,  must 
be  held  in  good  faith  to  have  intended,  as  they  are  liable, 
themselves  to  protect  the  cheque  which  they  had  given  to 
the  respondent.  And  so  the  negligence  of  the  respondent 
did  not  prejudice  the  appellants. 

This  view  is  not  affected  by  the  fact  that  the  bank  would 
probably  have  paid  the  cheque,  without  regard  to  the  state 
of  the  appellants'  account,  at  any  time  before  the  day  of 
the  bank's  failure.  On  that  day  the  bank  apparently 
would  not  have  honored  the  cheque  without  funds  of  the 
appellants  sufficient  to  meet  it.  If  at  any  time  the  bank 
had  paid  the  cheque  without  funds  of  the  appellants,  they 
would  have  been  liable  to  the  bank  for  the  amount 
advanced  to  pay  it.  It  was  immaterial  to  them  whether 
they  should  owe  the  amount  to  the  bank  or  to  the  respond- 
ent. Certain  it  is  that  they  must  owe  it  to  one  or  the 
other.  And  they  elected  to  owe  it  to  the  respondent.  As 
between  the  parties  here  the  appellants  could  have  escaped 
liability  over  only  by  leaving  funds  in  the  bank  to  meet 
the  cheque,  from  the  day  it  was  given  until  the  failure  of 
the  bank.  They  cannot  expect  to  draw  all  their  funds 
from  the  bank  before  its  failure,  and  then  escape  liability 
upon  a  cheque  previously  drawn,  merely  because  the  bank 
failed. 

It  makes  no  difference  in  the  relation  of  the  parties  that 
the  assignee  of  the  bank  in  bankruptcy  afterwards  recov- 
ered against  the  appellants  the  balance  which  they  drew 
out  in  favor  of  themselves  on  the  day  of  the  failure,  and 

5 


66  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

in  view  of  it.  That  recovery  went  upon  what  the  federal 
court  must  have  held  a  fraud  upon  the  bankrupt  law.  The 
state  law  gave  them  perfect  right  to  do  as  they  did.  And 
the  recovery  in  the  federal  court,  even  if  the  amount  had 
been  sufficient  to  pay  the  cheque,  leaves  the  fact  untouched 
that  the  appellants  had  in  fact  withdrawn  all  their  funds 
from  the  bank,  leaving  nothing  to  meet  the  cheque  which 
they  had  given  to  the  respondent. 

By  the  court.      The  judgment   of  the   court  below   is 

Affirmed. 


BUKKHALTER   v.  SECOND    NATIONAL    BANK   OF 

ERIE. 

Court  of  Appeals  of  New  York,  March,  1870.     42  N.  Y.  538. 

The  iudorsee  of  a  draft  on  demand  may,  on  the  day  he  has  taken  it, 
receive  from  the  drawee  a  cheque  upon  anotlier,  and  present  the  cheque 
on  the  day  following;  and  if  the  cheque  is  then  dishonored,  and  the  draft 
reclaimed  by  such  iudorsee  and  presented  again  to  the  drawee  thereof  on 
the  same  day  and  dishonored,  the  indorsee  fixes  the  liability  of  the  drawer 
by  immediate  protest,  followed  the  next  day  by  notice  of  dishonor,  though 
the  drawer  of  the  draft  had  funds  in  the  hands  of  the  drawee  on  the  day 
on  which  the  indorsee  received  it,  and  though  the  drawee  would  have  paid 
it  on  that  day  or  early  the  next  day,  on  which  latter  day  the  drawer  of 
the  draft  failed. 

Action  against  the  drawer  of  a  draft  on  demand.  On 
the  morning  of  the  26th  of  March,  1866,  the  plaintiffs  in 
New  York  received  by  mail  a  draft  on  Culver,  Penn,  & 
Co.  for  $1,116.89,  in  favor  of  Johnson  &  Brevillier,  and 
by  them  indorsed  and  sent  to  the  plaintiffs.  The  plain- 
tiffs presented  the  draft  immediately  to  the  drawees,  and 
received  in  lieu  thereof  the  drawees'  cheque  on  the  Third 
National  Bank  of  New  York  for  the  same  amount.  On 
the  27th  of  March  this  cheque  went  into  the  clearing  house 
for  payment,  and  was  dishonored,  the  draAvees,  Culver, 
Penn,  &  Co.,  having  failed  on  that  day.  The  cheque  was 
returned  to  them,  and  the  original  draft  sent  back  to  the 


BURKHALTER   v.  SECOND   NATIONAL   BANK,  ETC.       G7 

plaintiffs  on  the  same  27th  of  March.  That  draft  v:as  on 
that  day,  late  in  the  afternoon,  presented  to  the  drawees, 
Culver,  Penn  &  Co.,  by  a  notary,  and  dishonored.  Imme- 
diate protest,  and  notice  of  dishonor  to  the  defendant  on 
the  28th  of  March,   followed. 

On  the  26th  of  March  the  drawer  had  sufficient  funds  in 
the  hands  of  Culver,  Penn,  &  Co.  to  meet  the  dratt;  Culver, 
Penn,  &  Co.  had  in  hand  the  whole  day  ^12,000  or  more. 
The  draft  would  probably  have  been  paid  in  money,  had  it 
been  presented  on  March  20  or  early  on  March  27;  though 
Culver,  Penn,  &  Co.  could  not  have  paid  in  money  all  the 
drafts  on  them  presented  that  day. 

The  defendant,  supposing  that  it  was  liable  on  the  first 
draft,  gave  another  in  lieu  of  it,  and  suit  was  brought  upoii 
the  new  draft.  Defence,  that  it  was  given  under  mistake, 
and  that  the  defendant  was  not  liable  upon  the  first  draft. 

Judgment  for  plaintiffs  ;  defendant  appealed. 

Earl,  C.  J.,  for  the  court.  — The  plaintiffs  were  bound 
to  demand  payment  of  the  first  draft  on  the  day  they 
received  it  (March  26)  or  the  next  day  (March  27),  and 
they  had  the  right  to  hold  it  until  the  27th.  The  draft 
being  payable  on  demand,  they  were  bound  to  use  reason- 
able diligence  in  demanding  payment,  and  a  demand  on 
the  same  day,  or  the  next  day,  is,  in  the  law,  a  demand 
Avithin  a  reasonable  time.  Chit,  on  Bills,  377,  Spring- 
field ed.  of  1842;  Harker  v.  Anderson,  21  Wend.  372; 
Smith  V.  Jones,  20  Wend.  192;  Benton  v.  Martin,  31  X.  Y. 
385;  Merchants'  Bank  v.  Spicer,  6  Wend.  443;  Hazleton  v. 
Colburn,  2  Abb.  N.  S.  199.  It  was  sufficient  to  give  the 
notice  of  demand  and  refusal  on  the  next  day,  the  28th  of 
March.  Farmers'  Bank  of  Bridgeport  v.  Vail,  21  N.  Y. 
485;  Howard  v.  Ives,  1  Hill,  263. 

Therefore  in  demanding  payment  of  this  draft  on  the 
27th,  and  mailing  notices  of  non-payment  on  the  28th,  the 
plaintiffs  did  all  that  the  law  required  of  them,  and  the 
defendant  was  charged  as  drawer  of  the  draft,  unless  it 


68  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

was  discharged  by  what  took  place  on  the  26th.  On  that 
day  the  draft  was  neither  paid  nor  refused  to  be  paid. 
Culver,  Penn,  &  Co.  gave  their  cheque  for  it,  and  the 
cheque  was  in  due  time,  the  next  day,  in  the  ordinary 
course  of  business,  through  the  clearing  house,  presented 
for  payment  and  payment  refused.  There  was  no  agree- 
ment to  receive  the  cheque  in  payment.  It  was  taken  by 
the  plaintiffs  in  the  usual  course  of  business,  they  believ- 
ing that  it  would  be  paid.  They  then,  on  the  27th, 
returned  the  cheque  and  reclaimed  the  draft,  and  demanded 
payment  upon  it.  The  cheque  did  not  for  a  moment 
operate  as  a  payment  of  the  draft,  and  the  whole  trans- 
action does  not  show  the  absence  of  any  diligence  which 
the  defendant  had  a  right  to  demand  of  the  plaintiffs. 
It  is  settled  that,  upon  precisely  such  a  state  of  facts, 
the  drawer  and  indorser  of  a  draft  are  not  discharged. 
Johnson  v.  Bank  of  North  America,  5  Eobertson,  590; 
Smith  V.  Miller,  6  Robt.  157,  413;  Turner  v.  Bank  of  Fox 
Lake,  3  Keyes,  425.  Without  a  critical  examination  of 
earlier  cases  I  propose  to  rest  the  decision  of  this  case 
upon  the  authority  of  the  case  last  cited.  The  facts  of 
the  two  cases  are  as  nearly  alike  as  they  can  be,  and  the 
principle  involved  is  precisely  the  same.  The  judgment 
must  therefore  be  Affirmed. 

Five  judges  for  affirmance ;  two  for  reversal. 

It  will  be  noticed  that  the  instrument  drawn  on  Culver,  Penn, 
&  Co.  is  everywliere  called  a  'draft,'  while  that  given  by  Culver, 
Penn,  &  Co.  is  uniformly  called  a  'cheque.'  The  inference  must 
be  that  the  first  instrument  and  subject  of  the  action  was  jiot  a 
cheque;  it  must  then  have  been  a  bill  of  exchange.  Further,  it 
is  fair  inference  that  the  drawees  of  the  first  instrument.  Culver, 
Penn,  &  Co.,  were  bankers.  The  '  draft'  was  payable  on  demand; 
and  notice  of  dishonor  appears  to  have  been  treated  as  necessary. 

AVe  have  here  then,  apparently,  a  bill  of  exchange  —  as  distin- 
guished from  a  cheque  —  drawn  upon  a  banker,  and  payable  on 
demand ;  but  nothing  was  said  upon  the  point,  and  the  case  there- 
fore cannot  be  pressed  very  far  as  authority  in  that  particular.  See 
Bills  and  Xotes  (Students'  Series),  291,  note. 


MINOT   V.  KUSS.  69 

MINOT   V.    RUSS. 

Supreme  Court  of  Massachusetts,  June,  1892.     156  Mass.  458. 

If  the  drawer  in  his  owu  behalf,  or  for  his  owu  benefit,  gets  his  cheque 
certified  and  theu  delivers  it  to  the  payee,  the  drawer  is  not  discharged  ; 
but  if  the  payee  or  holder  in  his  owu  behalf,  or  for  his  own  benefit,  gets 
it  certified  instead  of  getting  it  paid,  theu  the  drawer  is  discharged. 

The  case  is  stated  in  the  opinion  of  the  court. 

Field,  C.  J.,  for  the  court.  — The  first  case  is  an  appeal 
from  a  judgment  rendered  by  the  Superior  Court  for  the 
defendant,  on  his  demurrer  to  the  declaration.  The 
defendant,  on  October  29,  1891,  drew  a  cheque  on  tlie  Mav- 
erick National  Bank,  payable  to  the  order  of  the  plaintiff, 
and,  being  informed  by  the  plaintiff  that  the  cheque  must 
be  certified  by  the  bank  before  it  would  be  received,  the 
defendant  on  the  same  day  presented  the  cheque  to  the 
bank  for  certification,  and  the  bank  certified  it  by  writing 
on  the  face  of  the  cheque  the  following:  '  Maverick 
National  Bank.  Pay  only  through  Clearing-House.  J. 
W.  Work,  Cashier.  A.  C.  J.,  Paying  Teller.'  After  it 
was  certified,  the  cheque  was,  on  Saturday,  October  31, 
1891,  delivered  by  the  defendant  to  the  plaintiffs,  for  a 
valuable  consideration.  The  declaration  alleges  that  the 
bank  stopped  payment  on  Monday  morning,  November  2, 
1891,  '  before  the  commencement  of  business  hours  on  said 
day,'  and  that  on  that  day  payment  was  duly  demanded  of 
the  bank,  and  notice  of  non-payment  was  duly  given  to  the 
defendant. 

The  second  case  is  an  appeal  from  a  judgment  rendered 
for  the  defendants  by  the  Superior  Court,  on  an  agreed 
statement  of  facts.  On  Saturday,  October  31,  1891,  the 
defendants  drew  their  cheque  on  the  Maverick  National 
Bank,  payable  to  the  order  of  the  plaintiffs,  and  delivered 
it  to  them  in  payment  of  stocks  bought  by  the  defendants 
of  the  plaintiffs.  The  cheque  was  received  too  late  to 
be  deposited  by  the  plaintiffs  for  collection  in  season  to  be 


70  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

carried  to  the  clearing-house  on  that  day,  but  during 
banking  hours  on  that  day  the  phiintiffs  presented  the 
cheque  to  the  Maverick  National  Bank  for  certification, 
and  the  bank  certified  it  by  writing  or  stamping  on  its 
face  the  following :  'Maverick  oSTational  Bank.  Certified. 
Pay  only  through  Clearing-House.  C.  C.  Domett,  A. 
Cashier.     ,  Faying  Teller. ' 

At  that  time  the  defendants  had  on  deposit  sufficient 
funds  to  pay  the  cheque,  and  the  bank  on  certification 
charged  to  the  defendant's  account  the  amount  of  the 
cheque,  and  credited  it  to  a  ledger  account  called  certified 
cheques,  in  accordance  with  their  uniform  custom.  After 
certification,  the  plaintiffs,  on  the  same  day,  deposited  the 
cheque  in  the  Hamilton  National  Bank  for  collection.  It  is 
agreed  that  if  the  cheque  had  been  presented  for  payment 
on  Saturday,  in  banking  hours,  it  would  have  been  paid ; 
but  the  Maverick  National  Bank  transacted  no  business 
after  Saturday,  and  on  Sunday  the  Comptroller  of  the  Cur- 
rency placed  a  national  bank  examiner  in  charge,  and  the 
bank  was  put  into  the  hands  of  a  receiver.  The  clearing- 
house on  November  2  refused  to  receive  cheques  on  the 
Maverick  National  Bank,  and  the  cheque  was  on  that  day 
duly  presented  for  payment,  and  due  notice  of  non-payment 
was  given  to  the  defendants. 

Each  of  the  cheques  was  in  the  ordinary  form  of  cheques 
on  a  bank,  and  was  payable  on  demand,  and  no  presentment 
for  acceptance  or  certification  was  necessary.  In  a  sense, 
undoubtedly,  a  cheque  is  a  species  of  bill  of  exchange,  and 
in  a  sense  also  it  is  a  distinct  commercial  instrument ;  but 
according  to  the  general  understanding  of  merchants,  and 
according  to  our  statutes,  these  instruments  were  cheques, 
and  not  bills  of  exchange.  '  A  cheque  is  an  order  to  pay  the 
holder  a  sum  of  money  at  the  bank,  on  presentment  of  the 
cheque  and  demand  of  the  money  ;  no  previous  notice  is 
necessary,  no  acceptance  is  required  or  expected,  it  has  no 
days  of  grace.  It  is  payable  on  presentment  and  not  be- 
fore.'    Bullard  v.  Randall,  1  Gray,  605,  606.     The  duty  of 


MINOT  V.  KUSS.  71 

the  bank  was  to  pay  these  cheques  when  they  were  presented 
for  payment,  if  the  drawers  had  sufficient  funds  on  deposit. 
Tlie  bank  owed  no  duty  to  tlie  drawers  to  certify  the  cheques, 
although  it  could  certify  them  if  it  saw  fit,  at  the  request 
of  either  the  drawers  or  the  holders,  and  if  it  certified  them 
it  became  bound  directly  to  the  holders,  or  to  the  persons 
who  should  become  the  holders.  In  either  case,  the  bank 
would  charge  to  the  account  of  the  drawer  the  amount  of 
the  cheque,  because  by  certification  it  had  become  absolutely 
liable  to  pay  the  cheque  when  presented.  When  a  cheque 
pa^'able  to  another  person  than  the  drawer  is  presented  by 
the  drawer  to  the  bank  for  certification,  the  bank  knows 
that  it  has  not  been  negotiated,  and  that  it  is  not  presented 
for  payment,  but  that  the  drawer  wishes  the  obligation  of 
the  bank  to  pay  it  to  the  holder  when  it  is  negotiated,  in 
addition  to  his  own  obligation.  But  when  the  payee  or 
holder  of  a  cheque  presents  it  for  certification,  the  bank 
knows  that  this  is  done  for  the  convenience  or  security  of 
the  holder.  The  holder  could  demand  payment  if  he  chose, 
and  it  is  only  because,  instead  of  payment,  the  holder  de- 
sires certification,  that  the  bank  certifies  the  cheque  instead 
of  paying  it.  In  one  case  the  bank  certifies  the  cheque  for 
the  use  or  convenience  of  the  drawer,  and  in  the  other  for 
the  use  or  convenience  of  the  holder.  In  the  present  cases 
the  checks  were  seasonably  presented  to  the  bank  for  pay- 
ment, and  on  the  facts  stated  the  defendants  would  be  liable 
unless  the  certification  discharged  them  from  liability. 

It  is  argued  that  the  certification  of  a  cheque,  whereby  the 
bank  becomes  absolutely  liable  to  pay  it  at  an}^  time  on 
demand,  discharges  the  drawer,  because  it  is  said  that  the 
cheque  then  becomes  in  effect  a  certificate  of  deposit ;  and 
it  is  also  argued  that  tlie  certification  is  in  effect  onlj'  an  ac- 
ceptance of  a  bill  of  exchange,  and  that  if  payment  is  duly 
demanded  of  the  bank  and  refused,  and  notice  of  non-pay- 
ment duly  given,  the  drawer  is  held.  So  far  as  the  question 
has  been  considered,  it  has  been  decided  that  the  certification 
of  a  bank  cheque  is  not,  in  all  respects,  like  the  making  of  a 


72    .  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

certificate  of  deposit,  or  the  acceptance  of  a  bill  of  exchange, 
but  that  it  is  a  thing  sui  generis,  and  that  the  effect  of  it 
depends  upon  the  person  who,  in  his  own  behalf,  or  for  his 
own  benefit,  induces  the  bank  to  certify  the  cheque.  The 
weight  of  authority  is,  that  if  the  drawer  in  his  own  behalf, 
or  for  his  own  benefit,  gets  his  cheque  certified,  and  then 
delivers  it  to  the  payee,  the  drawer  is  not  discharged ;  but 
that  if  the  payee  or  holder,  in  his  own  behalf  or  for  his  own 
benefit,  gets  it  certified  instead  of  getting  it  paid,  then  the 
drawer  is  discharged.  Born  v.  First  National  Bank,  123 
Ind.  78 ;  Rounds  v.  Smith,  42  111.  245 ;  Brown  v.  Leckie,  43 
111.  497  ;  Andrews  v.  German  National  Bank,  9  Heisk.  211 ; 
First  National  Bank  v.  Leach,  52  N.  Y.  350 ;  Boyd  v. 
Nasmith,  17  Ont.  40 ;  Essex  County  National  Bank  v.  Bank 
of  Montreal,  7  Biss.  193 ;  First  National  Bank  v.  Whitman, 
94  U.  S.  343,  345 ;  Metropolitan  National  Bank  v.  Jones, 
27  N.  E.  Eep.  533  ;  Continental  National  Bank  v.  Corn- 
hauser,  37  111.  App.  475 ;  National  Commercial  Bank  v. 
Miller,  77  Ala.  168  ;  Larsen  v.  Breene,  12  Col.  480 ;  Mutual 
National  Bank  v.  Rotge,  28  La.  An.  933;  Morse  on  Bank- 
ing, §§  414,  415.  We  are  of  opinion  that  this  view  of  the 
law  rests  on  sound  reasons.  If  it  be  true  that  the  existing 
methods  of  doing  business  make  the  use  of  certified  cheques 
necessary,  the  persons  who  receive  them  can  always  require 
them  to  be  certified  before  delivery.  If  they  receive  them 
uncertified  and  then  present  them  to  the  bank  for  certi- 
fication instead  of  payment,  the  certification  should  be 
considered  as  discharging  the  drawer. 

It  may  also  be  said,  that  in  the  second  case  the  certifica- 
tion amounted  to  an  extension  of  the  time  of  payment  at  the 
request  of  the  payees,  without  the  consent  of  the  drawers. 
Before  the  certification  the  drawers  could  have  requested 
the  payees  to  present  the  cheque  for  payment  on  Saturday, 
or  could  themselves  have  drawn  out  the  money  and  paid  the 
cheque.  After  certification  the  amount  of  the  clieque  no 
longer  stood  to  the  credit  of  the  drawers,  and  the  payees 
had  accepted  an  obligation  of  the  bank  to  pay  only  through 


WHISTLER   V.  FORSTER.  73 

the  clearing-house,  which  coukl  not  happen  before  the  fol- 
lowing Monday.  The  result  is  that  in  the  first  case  the 
judgment  is  reversed,  and  the  demurrer  overruled,  and  in 
the  second  case  the  judgment  is  affirmed. 


WHISTLER  V.   FORSTER. 
Common  Pleas  of  England,  Easter,  1863.     U  C.  B.  N.  S.  248. 

One  who  receives,  though  for  value,  au  unindorsed  cheque  payable  to 
order,  takes  it  with  uo  better  rights  thau  the  prior  holder  had. 

Action  by  indorsee  against  the  drawer  of  a  cheque,  pay- 
able to  A.  S.  Griffiths  &  Co.,  or  order,  and  indorsed  by  the 
payees  to  the  plaintiff. 

The  defendant  traversed  the  drawing  and  indorsement  of 
the  cheque,  and  also  pleaded  that  he  was  induced  to  draw 
it  by  and  through  the  fraud  of  Griffitlis  &  Co.,  and  that 
there  never  was  any  value  or  consideration  for  the  indorse- 
ment to  the  plaintiff  or  for  the  plaintiff's  holding  of  it,  and 
that  he  had  notice  of  the  premises  before  and  when  the 
cheque  was  first  indorsed  to  him,  and  took  the  same  from 
Griffiths  &  Co.  with  such  notice.     Issue  thereon. 

The  following  facts  appeared  on  the  trial :  The  cheque  in 
question,  which  bore  a  Id.  stamp,  was  drawn  by  the  defend- 
ant some  day  before  the  3d  of  October,  1862,  and  handed  by 
him  to  Griffiths  upon  an  understanding  that  it  was  not  to 
be  presented  for  payment  until  the  4th,  and  an  undertaking 
by  Griffiths  to  furnish  the  defendant  with  funds  to  meet  it 
early  on  the  morning  of  that  day,  which,  however,  he  failed 
to  perform.  Griffiths  on  the  3d  gave  the  cheque  to  the 
plaintiff  for  value,  but  did  not  then  indorse  it.  At  the  time 
he  received  the  cheque  he  had  no  notice,  apart  from  the 
want  of  indorsement  to  him,  of  the  way  in  which  Griffiths 
had  obtained  it  from  the  defendant,  but  before  he  obtained 
the  indorsement  he  had  notice  of  the  facts. 


74  CASES   ON   BILLS,  NOTES,  AND  CHEQUES. 

On  the  part  of  the  defendant  it  was  submitted  that  the 
plaintiff  could  not  recover  upon  the  cheque,  first,  because  it 
was  post-dated,  and.  secondly,  because  before  he  obtained 
Griflfiths'  indorsement  he  had  notice  of  the  fraud  practised 
by  Griffiths  upon  the  defendant. 

The  learned  judge  directed  a  verdict  to  be  entered  for  the 
defendant,  reserving  leave  to  the  plaintiff  to  move  to  enter 
a  verdict  for  him  if  the  court  should  be  of  opinion  that  the 
cheque,  though  post-dated  and  unstamped  (otherwise  than 
with  the  penny  stamp  imposed  by  21  &  22  Vict.  c.  20,  §  1), 
was  a  valid  instrument,  and  that  the  plaintiff  had  a  sufficient 
interest  in  the  cheque  to  entitle  him  to  sue  upon  it  before 
he  received  information  of  the  alleged  fraud.  Kule  nisi 
obtained. 

Ekle,  C.  J.  —  This  is  an  action  against  the  drawer  of  a 
bill  of  exchange ;  for  though  in  form  a  cheque,  the  instru- 
ment is  for  all  the  purposes  of  the  Stamp  Act  a  bill.  The 
plea  is  that  the  bill  was  obtained  from  the  defendant  by  one 
Griffiths  by  means  of  fraud,  and  that  it  was  indorsed  to 
the  plaintiff  after  he  had  notice  of  the  fraud.  The  facts  are 
shortly  these  :  The  instrument  was  a  negotiable  instrument 
which  had  been  fraudulently  obtained  from  the  defendant 
by  Griffiths  and  had  been  handed  over  by  Griffiths  to  the 
plaintiff  in  part  satisfaction  of  debt  of  a  larger  amount. 
But  Griffiths,  at  the  time  he  so  handed  over  the  bill  to  the 
plaintiff,  omitted  to  indorse  it.  Under  these  circumstances 
the  condition  of  things  was  this,  that  the  plaintiff  had  at 
that  time  the  same  rights  as  if  an  ordinary  chattel  had 
passed  to  him  by  an  equitable  assignment ;  he  would  have 
all  the  rights  which  Griffitlis  could  convey  to  him.  ISTow, 
Griffiths  having  defrauded  the  defendant  of  the  bill,  he 
could  pass  no  right  by  merely  handing  over  the  bill  to 
another.  According  to  the  law  merchant,  the  title  to  a 
negotiable  instrument  passes  by  indorsement  and  delivery. 
A  title  so  acquired  is  good  against  all  the  world,  provided 
the  instrument  is  taken  for  value  and  without  notice  of  any 


WHISTLER  V.  FORSTER.  75 

fraud.^  The  plaintiff's  title  under  the  equitable  assignment 
here  therefore  was  to  be  rendered  valid  by  indorsement ; 
but  at  the  time  he  obtained  the  indorsement  he  had  notice 
that  the  bill  had  been  fraudulently  obtained  by  Griffiths 
from  the  defendant  and  that  Griffiths  had  no  right  to  make 
the  indorsement.  Assuming  therefore  that  there  may  be 
conflicting  equities  between  the  plaintiff  and  the  defendant, 
I  think  the  right  should  prevail  according  to  the  rule  of 
law,  and  that  the  plaintiff  had  no  title  as  transferee  of  the 
bill  at  all. 

Then  as  to  the  stamp  .  .  .  [Properly  stamped.] 

WiLLES,  J.  —  I  concur  with  my  lord  as  to  both  points. 
.  .  .   [Properly  stamped.] 

As  to  the  second  point,  the  general  rule  of  law  is  un- 
doubted, that  no  one  can  transfer  a  better  title  than  he  him- 
self possesses ;  nemo  dat  quod  non  habet.  To  this  there 
are  some  exceptions,  one  of  which  arises  out  of  the  rule  of 
the  law  merchant  as  to  negotiable  instruments.  These, 
being  part  of  the  currency,  are  subject  to  the  same  rule  as 
money  ;  and  if  such  an  instrument  be  transferred  in  good 
faith,  for  value,  before  it  is  overdue,  it  becomes  available  in 
the  hands  of  the  holder,  notwithstanding  fraud  which  would 
have  rendered  it  unavailable  in  the  hands  of  a  previous 
holder.  This  rule,  however,  is  only  intended  to  favor  trans- 
fers in  the  ordinary  and  usual  manner  whereby  a  title  is 
acquired  according  to  the  law  merchant,  and  not  to  a  trans- 
fer which  is  valid  in  equity  according  to  the  doctrine 
respecting  the  assignment  of  choses  in  action,  now  indeed 
recognized  and  in  many  instances  enforced  by  courts  of 
law  ;  and  it  is  therefore  clear  that,  in  order  to  acquire  the 
benefit  of  this  rule,  the  holder  of  the  bill  must,  if  it  be  pay- 
able to  order,  obtain  an  indorsement,  and  that  he  is  affected 
by  notice  of  a  fraud  before  he  does  so.  Until  he  does  so, 
he  is  merely  in  the  position  of  the  assignee  of  an  ordinary 
chose  in  action,  and  has  no  better  right  than  his  assignor. 

1  Or  other  equity. 


76  CASES   OX  BILLS,  NOTES,  AND   CHEQUES. 

When  he  does  so,  he  is  affected  by  fraud  which  he  knew  of 
before  the  indorsement. 

Keating,  J.  —  I  am  of  the  same  opinion.  The  cheque 
'in  question,  being  payable  to  order,  was  properly  stamped 
for  the  purpose  of  being  admissible  in  evidence.  ...  As  to 
the  other  point,  I  think  the  plea  was  made  out.  The  plain- 
tiff sues  as  indorsee  of  the  bill  in  question.  The  plea  in 
substance  is,  that  the  defendant  was  defrauded  of  it  by  the 
person  to  whose  order  it  is  made  payable,  and  that  the 
plaintiff  had  notice  of  that  fact  before  the  instrument 
was  indorsed  to  him.  The  question  is,  when  was  the  bill 
indorsed  to  the  plaintiff  ?  It  must  be  recollected  that  the 
plaintiff  is  suing  in  a  court  of  law,  and  that  the  right  to 
sue  in  a  court  of  law  upon  a  negotiable  instrument  is  not 
complete  without  a  written  indorsement.  Now,  before  the 
plaintiff's  right  to  sue  was  rendered  complete  by  a  written 
indorsement,  he  had  notice  of  the  fraud.  The  subsequent 
indorsement  therefore  transferred  no  title  to  sue.  The  rule 
must  be  discharged. 

Rule  discharged. 

The  'notice'  of  the  fraud  in  this  case  is  evidently  informa- 
tion of  it.  The  indorsement  had  been  made,  it  seems,  before  the 
cheque  became  overdue  That  the  plaintiff  could  not  have  re- 
covered though  he  had  not  obtained  information  of  the  fraud  is 
clear,  if  the  indorsement  had  been  after  maturity.  See  Lancaster 
Bank  v.  Taylor,  100  Mass.  IS  ;  Bills  and  Notes  (Students'  Series), 
p.  02.  According  to  the  case  cited,  indorsement  after  maturity  would 
have  been  no  better  than  taking  after  maturity.  But  see  Beard  v. 
Dedolph,  29  Wis.  136.  On  the  other  hand,  indorsement  before  the 
cheque  became  overdue,  thoufjh  after  it  was  taken,  would  have 
given  the  plaintiff  a  perfect  title  had  he  not  meantime  received 
information  of  the  fraud. 


BROWN  V.   THE  BUTCHERS'  AKD  DROVERS',  ETC.    77 


BROWN  V.   THE  BUTCHERS'  AND  DROVERS' 

BANK. 

Supreme  Court  of  New  York,  May,  lSi4.     6  Hill,  443. 

The  figures  '1,2,  8,'  written  upon  a  bill  of  exchauge,  constitute  an 
iudorsemeut,  if  so  intended. 

Writ  of  error.  Brown,  the  defendant  below,  was  sued 
as  indorser  of  a  bill  of  exchange,  upon  which  were  the 
figures  '  1,  2,  S, '  in  pencil.  There  was  evidence  strongly- 
tending  to  show  that  the  figures  were  in  Brown's  hand,  and 
that  he  intended  thereby  to  bind  himself  as  an  indorser; 
though  it  was  also  proved  that  he  could  write.  The  judge 
charged  that  if  this  evidence  was  believed,  the  jury  must 
find  for  the  plaintiif.  The  defendant  excepted.  Verdict 
and  judgment  for  the  plaintiff. 

Nelson,  C.  J.,  for  the  court.  — It  has  been  expressly 
decided  that  an  indorsement  written  in  pencil  is  sufficient. 
Geary  v.  Physic,  5  Barn.  &  Cress.  234;  and  also  that  it 
may  be  made  by  a  mark.  George  v.  Svirrey,  ]\Iood.  & 
Malk.  516.  In  a  recent  case  in  the  King's  Bench,  it  was 
held  that  a  mark  was  a  good  signing  within  the  Statute  of 
Frauds;  and  the  court  refused  to  allow  an  inquiry  into 
the  fact  whether  the  party  could  write,  saying  that  would 
make  no  difference.  Baker  v.  Denning,  8  Adol.  &  Ellis,  04. 
And  see  Harrison  v.  Harrison,  8  Ves.  185;  Addy  v.  Grix, 
8  id.  .54. 

These  cases  fully  sustain  the  ruling  of  the  court  below. 
They  show,  I  think,  that  a  person  may  become  bound  by 
any  mark  or  designation  he  thinks  proper  to  adopt,  pro- 
vided it  be  used  as  a  substitute  for  his  name,  and  he  intend 
it  to  bind  himself. 

Judgment  affirmed. 


78  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

CRIST   V.    CRIST. 

Supreme  Court  of  Indiana,  November,  1849.     1  Carter,  570. 

Uut.l  the  executor  cDi.seiits  to  the  becjiiest  by  the  testator  of  a  promis- 
sory uote  to  A,  A  has  uo  legal  title  to  the  uote,  ami  the  executor  may  sue 
upon  it.i 

Blackford,  J.,  for  the  court.  — This  was  an  action  of 
debt  brought  by  James  W.  Crist,  executor  of  George  W. 
Crist,  deceased,  against  Christian  Crist. 

The  suit  is  founded  on  two  sealed  notes  for  the  payment 
of  money,  executed  in  December,  1839,  by  the  defendant, 
and  payable  to  the  testator.  There  are  two  special  pleas, 
to  which  replications  were  filed.  The  replications  Avere 
demurred  to  generally,  and  judgment  was  rendered  for  the 
plaintiff.  It  is  not  deemed  necessary  to  set  out  the  plead- 
ings at  length.  Taking  the  allegations  in  the  replications 
to  be  true,  which  we  must  do,  the  facts  may  be  considered 
to  be  as  follows :  — 

In  1836  George  W.  Crist,  being  the  owner  in  fee  of  a 
certain  quarter-section  of  land,  made  his  will,  and  devised 
the  east  half  of  said  quarter-section  to  his  son.  Resin  Crist. 
The  defendant  afterwards  purchased  of  Resin  Crist  the 
interest  which  the  latter  claimed  in  the  land  under  the 
Avill,  and  gave  his  notes  for  the  price;  but  there  does  not 
appear  to  have  been  any  written  evidence  of  such  purchase. 
After  that  purchase,  namely,  in  1839,  George  W.  Crist, 
the  devisor,  sold  said  east  half  of  said  quarter-section  of 
land  to  the  defendant,  and  conveyed  the  same  to  him  in 
fee,  receiving  in  payment  from  the  defendant  the  notes 
now  sued  on,  together  with  a  mortgage  on  the  land  to 
secure  the  purchase  money.  Resin  Crist,  who  died  before 
his  father,  left  an  infant  son  named  William  as  his  heir, 

1  It  follows,  as  indorsement  is  necessary  where  the  paper  is  payable  to 
the  order  of  tiie  decedent,  that  tliere  must  be  indorsement  by  the  personal 
representative  to  the  legatee,  the  point  to  be  specially  illustrated  here.  See 
Bills  and  Notes  (Students'  Series),  p.  63. 


CRIST  V.  CRIST.  79 

who  is  now  living.  George  W.  Crist  died  on  the  27th  of 
March,  1844,  without  having  altered  his  will,  the  Revised 
Statutes  of  1843  being  then  in  force. 

The  grounds  relied  on  to  defeat  this  suit  were  stated  by 
the  defendant's  counsel,  in  their  brief,  to  be  as  follows: 
'  First,  these  notes,  or  the  proceeds  of  the  sale,  belong  to 
William  Crist,  the  infant  son  of  Resin.  Secondly,  the 
action  should  have  been  in  the  name  of  the  infant. ' 

We  agree  with  the  defendant  that  the  legacy  of  the  notes 
and  mortgage,  if  there  be  such  a  legacy,  did  not  lapse  by 
the  death  of  Resin  Crist  in  the  lifetime  of  his  father.  By 
virtue  of  the  statute  the  legacy,  if  any,  passed  to  William 
Crist,  the  infant  son  and  heir  of  Resin,  as  it  would  have 
passed  to  Resin  himself  had  he  survived  the  testator.  R. 
S.  1843,  p.  489,  §  23.  But  whether  there  is  in  fact  any 
such  legacy  is  another  question.  Previously  to  the  Re- 
vised Statutes  of  1843  the  testator's  sale  and  conveyance 
in  fee  to  the  defendant  of  the  land,  and  his  taking  of  a 
mortgage  on  the  land  to  secure  the  price,  after  the  execution 
of  the  will,  would  have  been  a  revocation  of  the  will  as 
to  said  land.  Adams  v.  Winne,  7  Paige,  97  (1).  The 
defendant  contends,  however,  that  this  rule  is  so  changed 
by  the  17th  sec.  of  chap.  30  of  the  R.  S.  of  1843,  that  the 
notes  and  mortgage  in  question  are  now  to  be  considered, 
under  the  circumstances  of  this  case,  as  specifically 
bequeathed  by  the  will.  Whether  this  position  of  the 
defendant  is  correct  or  not  we  shall  not  stop  to  inquire. 
Admitting,  for  the  sake  of  the  argument,  that  William 
Crist  is  the  specific  legatee  of  the  notes  and  mortgage, 
that  specific  bequest  is  not  sufficient,  of  itself,  to  defeat 
the  present  action. 

It  was  the  executor's  duty,  by  statute,  to  inventory, 
among  other  things,  all  bonds,  mortgages,  notes,  and  other 
securities  for  the  payment  of  money.  R.  S.  1843,  p.  515; 
There  is  also  the  following  statutory  provision :  '  When 
any  mortgagee  of  real  estate,  or  any  assignee  of  such 
mortgagee,  shall  die  without  having  foreclosed  the  right  of 


80  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

redemption,  or  recovered  payment  of  the  amount  secured 
by  such  mortgage,  the  mortgaged  premises,  and  the  debt 
secured  thereby,  shall  be  considered  as  personal  assets  in 
the  hands  of  his  executor  or  administrator,  and  shall  be 
administered  and  accounted  for  as  such ;  and  such  executor 
or  administrator,  as  such,  shall  have  the  same  right  to 
possession  of  the  mortgaged  premises,  and  to  bring  any 
suit  or  action  respecting  the  same,  or  for  the  recovery  of 
the  debt  secured  thereby,  and  to  execute,  discharge,  or 
perform  any  duty,  act,  or  power  contained  in  such  mort- 
gage, or  in  the  provisions  of  any  law,  as  such  mortgagee 
or  assignee  could  if  he  were  alive.'     II.  S.  1843,  p.  572. 

There  can  be  no  doubt,  therefore,  but  that  the  notes  and 
mortgage  before  us,  supposed  by  the  defendant  to  be  spe- 
cifically bequeathed,  are  part  of  the  personal  estate  of  the 
testator. 

It  is  well  settled  that  before  any  legatee  of  personal 
property  is  entitled  to  his  legacy,  he  must  have  the  assent 
to  it  of  the  executor.  The  doctrine  is  thus  stated :  '  The 
whole  personal  property  of  the  testator  devolves  upon  his 
executor.  It  is  his  duty  to  apply  it,  in  the  first  place,  to 
the  payment  of  the  debts  of  the  deceased;  and  he  is  respon- 
sible to  the  creditors  for  the  satisfaction  of  their  demands, 
to  the  extent  of  the  whole  estate,  without  regard  to  the 
testator's  having,  by  the  will,  directed  that  a  portion  of 
it  shall  be  applied  to  other  purposes.  Hence,  as  a  protec- 
tion to  the  executor,  the  law  imposes  the  necessity  that 
every  legatee,  whether  general  or  specific,  and  whether  of 
chattels  real  or  personal,  must  obtain  the  executor's  assent 
to  the  legacy  before  his  title  as  legatee  can  be  complete 
and  perfect.  Hence,  also,  the  legatee  has  no  authority  to 
take  possession  of  his  legacy  without  such  assent,  although 
the  testator  by  his  will  expressly  direct  that  he  shall  do 
so;  for  if  this  were  permitted,  a  testator  might  appoint 
all  his  effects  to  be  thus  taken,  in  fraud  of  his  creditors. 
It  follows  from  the  rule  respecting  the  necessity  of  the 
executor's  assent,  that   if,  without   it,  the   legatee  takes 


CRIST  V.  CRIST.  81 

possession  of  the  thing  bequeathed,  the  executor  may 
maintain  an  action  of  trespass  or  trover  against  him;  so, 
although  a  chattel,  real  or  personal,  specifically  bequeathed, 
be  in  the  custody  or  possession  of  the  legatee,  and  the 
assets  be  fully  adequate  to  the  payment  of  the  debts,  he 
has  no  right  to  retain  it  in  opposition  to  the  executor;  by 
whom,  in  such  case,  an  action  will  lie  to  recover  it.'  2 
AVilliams  on  Executors,  982,  983. 

If  the  executor  refuse  his  consent  to  a  legacy  without 
cause,  the  legatee  is  entitled  to  relief  in  equity.  Id.  984 ; 
1  Koper  on  Leg.  573. 

The  following  is  a  late  case  on  this  subject:  A  testator 
bequeathed  to  his  two  sons  his  two  carriage  manufactories, 
with  all  fixtures,  implements,  tools,  stock,  job-carriages, 
harness,  and  everything  appertaining  to  his  trade  in  the 
said  manufactories.  At  the  time  of  the  testator's  death  a 
carriage  was  in  one  of  the  manufactories  unfinished,  which 
was  being  built  to  the  order  of  the  purchaser.  A  question 
arose  between  the  executors  and  the  sons,  whether  this 
carriage  fell  within  the  above  bequest  ;  and  the  executors 
paid  the  legacy  duty  on  the  whole,  but  annexed  the  follow- 
ing memorandum  to  the  legacy  receipt :  '  A  disagreement 
arising  between  the  sons  S  and  T  and  the  executors,  as  to 
whether  the  whole  of  this  item  belongs  to  the  said  sons, 
or  part  of  the  residue,  the  executors  desire  to  pay  the  duty 
on  the  whole,  leaving  it  for  them  to  settle  with  the  lega- 
tees the  proportion  of  duty,  when  the  matter  in  dispute 
shall  be  determined.'  The  sons  retained  possession,  and 
finished  the  carriage,  delivered  it  to  the  purchaser,  and 
received  the  price.  The  executors  thereupon  brought  an 
action  against  the  sons  for  money  had  and  received ;  and 
the  action  was  sustained,  on  the  ground  that  the  executors 
had  not  assented  to  the  legacy.  Lord  Abinger  said :  '  I 
see  no  evidence  of  assent  to  the  taking  of  this  particu- 
lar chattel  by  the  defendants.  Putting  the  case  in  the 
strongest  way  for  them,  that  the  executors  had  assented 
to  the  bequest  of  the  stock,  they  yet  expressly  withheld 

6 


82  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

their  assent  as  to  this  carriage,  supposing  that  it  did  not 
form  part  of  the  stock  in  trade,  or  at  least  wishing  for 
time  to  make  up  their  minds  whether  it  came  within  that 
description  of  propert}^  or  not.  And  we  have  no  right  to 
consider  whether  they  were  right  in  thus  withholding  their 
assent  or  not.  That  is  a  question  for  the  consideration  of 
a  court  of  equity,  on  a  bill  filed;  but  the  legatee  can  main- 
tain no  action  at  law  until  the  executor  has  assented  to  the 
bequest.  Here,  for  some  reason  good  or  bad,  it  appears 
that  the  executors  had  withheld  their  assent;  and  they 
had  a  right  to  do  so  until  compelled  by  a  competent 
authority.'     Elliott  v.  Elliott,  9  Mees.  &  Welsh.  23. 

It  does  not  appear  in  the  case  before  us  that  any  assent 
was  ever  expressly  given  by  the  executor  to  the  legacy  in 
question;  nor  are  there  any  facts  stated  from  which  an 
assent  can  be  presumed. 

This  is  a  suit  by  an  executor  on  notes  given  by  the 
defendant  to  the  testator,  the  notes  being  secured  by  a 
mortgage  on  real  estate.  The  defence  is,  that  the  notes 
and  mortgage  were  specifically  bequeathed  to  one  William 
Crist,  in  whose  name  the  suit  should  have  been  brought. 
We  have  shown  that  the  notes  and  mortgage  are  part  of  the 
personal  estate  of  the  testator,  and  that,  supposing  them 
to  have  been  specifically  bequeathed  by  him,  they  cannot 
be  said  to  be  the  property  of  the  legatee  until  the  executor 
shall  have  consented  to  the  legacy.  No  such  assent  being 
shown,  the  defence  must  fail. 

A  debtor  to  an  estate,  where  the  debt  has  been  specifi- 
cally bequeathed  by  the  testator,  cannot,  before  the  execu- 
tor has  assented  to  the  legacy,  say  to  the  latter,  '  I  will 
not  pay  you.'     Bank  of  England  v.  Parsons,  5  Ves.  665. 

Whether,  if  the  executor  had  assented  to  the  legacy,  the 
suit  on  the  notes  should  not  still  be  in  his  name,  we  have 
not  examined. 

Per  curiam:  The  judgment  is 

Affirmed  with  costs. 


SHAW  V.  KNOX.  83 

SHAW   V.    KNOX. 

Supreme  Court  of  Massachusetts,  November,  1867.    98  Mass.  214. 

One  who  indorses  a  draft  for  the  accommodation  of  the  drawer,  and  at 
the  request  of  another  who  also  indorses  it  at  the  same  time  and  for  the 
same  purpose,  does  not  thereby  become  a  joint  indorser  with  him. 

An  accommodation  indorser  of  a  draft  who  has  been  obliged  to  pa\'  it 
to  a  holder  for  value  may  maintain  an  action  thereon  against  a  prior 
indorser. 

Contract  on  a  draft  by  Kathaniel  Heath  on  John  W. 
AVest  for  payment  of  $450,  three  months  after  date  to  the 
order  of  the  defendant,  indorsed  by  the  latter  and  bearing 
also,  below  the  defendant's  indorsement,  the  indorsement 
of  E.  Longfellow  &  Son. 

Trial  in  the  Superior  Court,  without  a  jury,  when  it 
appeared  that  the  draft  was  drawn  on  the  day  of  its  date, 
and  indorsed  by  the  defendant,  and  then  at  his  request  by 
E.  Longfellow  &  Son,  '  so  that  it  could  be  discounted  ' 
(neither  of  the  indorsers  receiving  any  consideration  there- 
for), and  then  was  negotiated,  and  discounted  by  a  bank, 
and  presented  for  acceptance  ;  that  it  was  accepted  by 
West,  but  on  maturity  was  protested  for  non-payment ;  and 
that  E.  Longfellow  &  Son  some  months  later  paid  it  to  the 
bank  and  took  it  up,  and  afterwards  sold  it  to  the  plaintiff. 

The  defendant  asked  the  judge  to  rule  '  that  E.  Long- 
fellow &  Son  and  the  defendant  were  joint  accommodation 
indorsers,  and,  when  the  former  paid  the  draft,  its  negoti- 
ability was  destroyed,  and  they  could  not  pass  it  to  the 
plaintiff  so  that  he  could  maintain  an  action  thereon.' 
But  he  declined  so  to  rule,  and  ruled  that  the  plaintiff 
could  maintain  his  action,  and  found  for  the  plaintiff;  and 
the  defendant  alleged  exceptions. 

BiGELOw,  C.  J.,  for  the  court. — There  was  no  joint  liability 
on  the  part  of  the  defendant  with  the  subsequent  indorsers. 
The  indorsers  on  the  draft  were  all  liable  to  the  holders  of 


84  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

the  draft  for  value  on  their  several  contracts  of  indorse- 
ment. There  was  no  agreement  between  the  parties,  when 
the  draft  was  made  and  indorsed,  that  they  should  hold  any 
other  relation  towards  each  other  than  that  which  would 
result  from  their  being  successive  indorsers  on  the  draft 
for  the  accommodation  of  the  drawer.  If  the  last  indorser 
paid  the  draft  to  the  holder  for  value,  he  would  succeed 
to  the  right  of  such  holder,  and  could  look  to  his  prior 
indorser  for  payment  of  the  amount  paid  by  him.  Guild 
V.  Eager,  17  Mass.  615.  Such  payment  was  in  fact  made  by 
the  second  indorsers,  from  whom  the  plaintiff  derives  his 
title  to  the  draft.  The  relations  of  the  parties  to  the  draft 
can  in  no  sense  be  regarded  as  creating  a  contract  of  joint 
guaranty  and  suretyship.  The  rights  and  duties  of  the 
several  parties  to  an  accommodation  note  or  bill  of 
exchange  are  the  same  in  all  respects  as  upon  notes  given 
for  value.  The  legal  effect  of  the  contract  into  which 
they  respectively  enter  by  becoming  parties  to  negotiable 
paper  is  that  which  appears  on  the  face  of  the  bill  or  note. 
It  follows  that,  if  an  accommodation  indorser  is  obliged  to 
take  up  the  draft  in  the  hands  of  a  holder  for  value,  he  can 
look  to  his  prior  indorser  for  payment.  Church  v.  Barlow, 
9  Pick.  547;  Clapp  v.  Rice,  13  Gray,  403;  Howe  v. 
Merrill,  5  Gush.  80. 

Exceptions  overruled. 


DALE   V.  GEAR. 

Supreme  Court  of  Connecticut,  February,  1871.     38  Conn.  15. 

Parol  evideuce  is  not  admissible  to  show  that  an  indorsement  in  blank 
of  a  nejrotiable  promissory  note  was  by  agreement  of  the  parties  to  be 
taken  as  an  indorsement  without  recourse,  if  no  agency,  trust,  or  ante- 
cedent equity  existed  between  the  parties. 

Assumpsit  by  the  holder  against  the  indorser  in  blank  of 
a  promissory  note.  Plea,  that  in  consideration  of  the 
defendant's  agreement  '  to  indorse  said  note  in  blank,  and 


DALE   V.  GEAR.  85 

to  omit  prefixing  the  words  "without  recourse"  to  his  said 
indorsement,  they,  the  said  pLaintiffs,  by  parol,  then  and 
there  promised  and  agreed  that  they  never  would  have 
recourse  to  the  said  defendant  upon  said  note  or  upon  said 
indorsement.'  Demurrer  to  the  plea,  and  case  reserved 
thereon  for  the  Supreme  Court. 

BuTLEK,  C.  J.,  for  the  court. — We  have  given  this 
case  the  consideration  which,  as  involving  an  important 
commercial  question,  it  has  seemed  to  require,  and  are  of 
opinion  that  the  plea  cannot  be  sustained  on  principle  or 
by  authority. 

First,  it  is  not  sustainable  on  principle. 

The  rule  that  parol  evidence  is  not  admissible  to  contra- 
dict or  vary  a  written  contract  is  founded  in  the  highest 
principles  of  public  policy,  and  there  is  no  class  of  contracts 
to  which  it  should  be  more  inflexibly  applied  than  to  those 
connected  with  bills  of  exchange  and  promissory  notes. 
Nor  is  there  any  one  of  the  varied  and  special  contracts, 
so  connected,  in  respect  to  which  the  application  of  the 
rule  is  more  important  than  the  contract  of  warranty 
implied  by  law  from  the  blank  indorsement  of  a  negotiable 
note  by  the  payee  before  maturity.  It  is  absolutely  essen- 
tial to  the  negotiability  of  such  a  note  that  the  rule  to 
which  we  have  alluded  should  be  applied  to  it;  and  it  has 
always  been  so  applied  when  the  note  has  been  negotiated 
to  a  second  indorsee  and  an  effort  has  been  made  to  prove 
some  contemporaneous  parol  agreement  in  bar. 

But  it  has  sometimes  been  claimed,  and  is  claimed  in 
support  of  the  plea  in  this  case,  that  notwithstanding  the 
rule  is  so  applied  in  favor  of  a  bona  fide  holder  to  whom 
the  note  has  been  negotiated,  yet  as  between  the  indorser 
and  indorsee,  the  original  parties  to  the  contract  of  indorse- 
ment, the  rule  should  not  be  applied.  But  the  answer 
must  be,  that  the  contract  of  indorsement  is  implied  by 
huv  as  clearly  and  perfectly  from  the  blank  indorsement 
of   a  negotiable  note,   irrespective   of  any  contingency  of 


86  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

uegotiation,  as  if  written  out  in  full  when  indorsed.     And 
if,   as   between  the  original   parties,  there   is   any  equity 
existing  dehors  the  instrument,  which  should  prevent  the 
indorsee  from  enforcing  the  contract,  it  must  be  set  up  as 
an   equity   provable  in   equity,  to  bar   an   apparent  legal 
liability;  and  cannot  be  shown  because  the  rule  of  evidence 
to  which  we  have  alluded  is  not  applicable.^     The  rule  is 
as  applicable  to  such  parties  as  to  others,  and  the   true 
theory  is,  that  the  relation  or  antecedent  agreement   out 
of  which  the  equity  arises  may  be  shown  between  them, 
and  proof  of  it  does  not  necessarily  contradict  the  contract. 
There  are  four  classes  of  cases  in  which,  as  exceptional 
cases,   and  as  between  the  original  parties,  indorser  and 
indorsee,  any  relation,  antecedent  agreement,  or  state  of 
facts    from   which   a   controlling    equity   arises,    may   be 
pleaded  and  proved  by  parol  in  bar  of  an  action  on  the 
warranty.     Thus,  the  relation  of  principal  and  agent  may 
be  shown,  for  the  ageut  takes  no  title  or  warranty  from 
the  indorser,  but  holds  as  agent.     So,  secondly,  it  may  be 
shown  that  the  note  was  indorsed  to  the  holder  for  some 
special  purpose,  and  is  holden    in   trust,  as    where   it   is 
indorsed   and   delivered  for  collection  merely.     Lawrence 
V.  Stonington  Bank,  6  Conn.  521,   is  an  example  of  this 
class   of  cases    in   our    own    reports.      In    like    manner, 
thirdlj",    the    relation   of    principal    and    surety   may   be 
shown,  and  that  the  indorsement  was  made  at  the  request 
and  for  the   accommodation   of  the   immediate   indorsee; 
for   the   equity  of   the   relation   forbids   the   enforcement 
of  the  contract.     Such  was  Case  v.  Spaulding,  24  Conn. 
578.       So,    fourthly,    it   may   be   shown    that    there   was 
an  equity  arising  from  an  antecedent  transaction,  includ- 
ing  an  agreement   that  the  note  should  be  taken  in  sole 
reliance  on  the  responsibility  of  the  maker,  and  that  it  was 
indorsed   in   order   to   transfer   the   title  in  pursuance  of 
such  agreement,  and  that  the  attempt  to  enforce  it  is  a 

1  That  is,  the  equity  may  be  shown,  not  upon  any  ground  that  the  rule 
against  parol  evidence  is  not  applicable,  but  upon  grounds  of  its  own. 


DALE  V.  GEAR.  87 

fraud.  Such  was  Downer  v.  Cheseborough,  36  Conn.  39. 
The  exceptions  illustrate  the  rule.  But  this  plea  shows 
uo  agency,  trust,  equitable  relation,  or  equity  connected 
with  an  antecedent  transaction  constituting  a  considera- 
tion for  the  agreement,  or  which  would  justify  a  court  of 
equity  in  interfering  to  prevent  an  enforcement  of  the 
contract  of  warranty  Avhicli  the  law  implies.  It  presents  a 
naked  case  of  an  attempt  to  prove  by  parol  that  a  clear  and 
unambiguous  contract  of  warranty  is  not  such,  and  to  con- 
tradict it  in  terms,  —  to  turn  an  indorsement  without 
restriction,  before  maturity,  into  a  restricted  indorsement. 
Such  a  plea  cannot  be  sustained  without  a  violation  of 
essential  principles. 

Nor  is  the  plea  supported  by  any  well-considered  and  un- 
questioned authority. 

The  defendant  claims,  in  the  first  place,  that  it  is  sup- 
ported by  the  decisions  of  this  State,  and  he  relies  on  a  class 
of  cases  where  the  action  was  upon  a  non-negotiable  note, 
or  a  negotiable  note  indorsed  by  one  not  a  party  to  it,  which 
by  our  law  stands  on  the  same  ground.  But  those  decisions 
cannot  sustain  him.  That  class  of  blank  indorsements  is 
not  controlled  by  commercial  usage,  and  does  not  import  an 
absolute  contract  of  warranty.  The  contract  presumed  by 
law  from  them  is  presumed  prima  facie  only,  and  differs 
in  different  States.  In  this  State  such  indorsements  are  not 
only  prima  facie  but  conditional ;  that  is,  that  the  note  shall 
be  collected  of  the  maker  by  due  diligence.  In  Massa- 
chusetts and  New  York  such  an  indorsement  is  treated  as 
absolute  guaranty,^  or  the  indorser  charged  as  a  joint  pro- 
misor.^ In  all,  the^  presumption  is  treated  as  one  of  fact 
rather  than  one  of  law,  and  the  real  contract  made  between 
the  parties,  if  a  special  one,  may  be  written  over  the  signa- 
ture of  the  indorser.^  It  is  otherwise  in  a  note  like  this. 
There  are  then  broad  lines  of  distinction  between  the  two 

1  As  to  the  rule  in  New  York,  see  ante,  p.  29. 
■■^  The  rule  in  Massachusetts.  See  ante,  p.  38. 
^  That  is  not  true  in  Massachusetts.    See  \Yright  i;.  Morse,  9  Gray,  337. 


88  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

classes  of  indorsements,   and  the  defendant's    plea  is  not 
supported  by  the  class  of  decisions  referred  to. 

The  defendant  also  relies  on  Case  v.  Spaulding,  24  Conn. 
578,  but  it  does  not  sustain  him.  There  the  defendant  was 
not  the  payee,  and  as  second  indorser  was  not  liable  to  the 
payees  of  the  note,  for  they  as  first  indorsers  were  bound  to 
pay  it.  The  defendant  also  indorsed  at  the  request  of  the 
plaintiff  as  surety,  for  his  accommodation,  and  was  within 
one  of  the  classes  of  equitable  exceptions,  where  the  rela- 
tion on  which  the  equity  rests  may  be  shown.  The  dictum 
of  Judge  Ellsworth,  confined  within  the  limits  called  for 
by  the  case,  was  undoubtedly  true  ;  but  the  defendant  does 
not  bring  himself  within  the  exception. 

The  defendant  further  relies  on  Downer  v.  Cheseborough, 
36  Conn.  39,  but  he  is  not  sustained  by  that  case.  It  was 
not  put  to  us  as  a  case  where  the  antecedent  contract  which 
created  an  equity  between  the  parties  could  not  be  shown 
under  our  law,  if  the  contract  had  been  made  sure,  in  con- 
nection with  the  agreement  claimed,  to  show  that  the  plain- 
tiff was  attempting  to  perpetrate  a  fraud,  but  as  a  case 
where,  by  the  laws  of  New  York,  where  the  contract  was 
made,  it  could  not  be  proved  by  parol.  The  case  turned 
solely  on  the  question  whether  the  law  of  evidence  of  the 
forum  or  of  the  lex  loci  contractus  should  govern.  In  that 
aspect  only  we  considered  and  decided  it,  and  that  question 
alone  is  discussed  in  the  opinion.  If  the  questions  which 
are  raised  here  had  been  raised  there,  we  should  have  holden 
without  hesitation,  first,  that  the  indorsement  of  a  negoti- 
able note  before  maturity  by  the  payee  creates  an  absolute 
warranty  to  the  immediate  as  well  as  all  subsequent  in- 
dorsees that  the  instrument  and  the  antecedent  signatures 
thereon  are  genuine ;  that  the  indorser  has  title  to  the  in- 
strument, and  is  competent  to  bind  himself  by  the  indorse- 
ment; and  that  the  maker  will  pay  it  on  due  presentment 
when  it  is  due ;  but  that,  if  he  does  not,  the  indorser  will 
pay  it  if  due  notice  is  given  him  of  such  dishonor;  and, 
secondly,  that   no  special  agreement  —  as  that  the    unre- 


DALE   r.  GEAR.  89 

stricted  indorsement  was  intended  or  agreed  to  be  a  restricted 
one  -*-  can  be  given  by  parol  evidence,  except  in  the  class  of 
cases  adverted  to  where  an  equitable  relation  existed  be- 
tween the  parties  in  respect  to  the  indorsement  when  it 
was  made,  which  rendered  the  enforcement  of  the  contract 
inequitable  and  fraudulent.  Equity  overrides  all  rights,  and 
suspends  the  operation  of  all  legal  rules  between  original 
parties  when  necessary  to  prevent  a  fraudulent  use  of  them ; 
and  therefore  the  exceptions  mentioned  have  been  recog- 
nized and  applied  at  law.  Downer  v.  Cheseborough  was 
clearly  within  one  of  the  exceptions,  but  this  case  is  not. 

The  defendant  under  his  second  point  cites  three  cases 
from  Pennsylvania  to  show  that  the  contract  set  up  in  the 
plea  was  provable  there  by  parol.  In  examining  those  cases 
we  think  the  law  of  Pennsylvania  is  otherwise.  The  first 
case  cited  is  that  of  Hill  v.  Ely,  5  Serg.  &  Eawle,  363.  The 
marginal  note  sustains  his  claim,  but  the  case  does  not.  In 
that  case  it  appears  that  the  defendant  purchased  coffee  of 
the  plaintiff  upon  an  express  agreement  that  the  plaintiff 
should  receive  in  full  payment  the  notes  of  one  Jabez  Lamb, 
without  the  responsibility  of  the  defendant.  The  notes 
were  payable  to  the  order  of  the  defendant,  and  were  handed 
to  the  plaintiff,  pursuant  to  agreement,  without  indorsement. 
The  plaintiff  then  said  to  the  defendant,  '  Hill,  you  must 
indorse  those  notes ; '  to  which  Hill  replied,  '  That  is  not 
our  understanding.'  The  plaintiff  rejoined,  '  They  are 
made  payable  to  you ;  how  will  you  convey  them  to  me  ? 
You  must  indorse  them,  in  order  that  I  may  collect  them.' 
Hill  then  said,  '  I  indorse  them ;  but  remember,  I  am  not 
to  be  held  responsible  for  their  payment.' 

The  case  was  put  to  the  court  by  the  distinguished  counsel 
engaged  solely  on  the  ground  that  the  attempt  of  Hill  [Ely] 
to  charge  Ely  [Hill]  upon  his  indorsement  was  a  fraud,  and 
the  court  so  held.  They  say :  '  The  evidence  offered  went 
to  prove  a  direct  fraud  in  obtaining  the  indorsements  or 
their  perversion  to  a  use  never  intended,  —  a  fraudulent  pur- 
pose.'    The  court  further  say  that  parol  or  extrinsic  evi- 


90  CASES  OX  BILLS,  NOTES,  AND   CHEQUES. 

deuce  would  be  received  iu  cliaucery  to  reach  such  a  fraud, 
aud  therefore  would  be  received  iu  their  courts  at  law;  that 
the  relief  in  equity  would  be  grounded,  not  upon  the  admis- 
sibility of  parol  evidence  as  between  such  parties  to  contra- 
dict the  writing,  but  to  show  extrinsic  facts  raising  an  equity 
dehors  the  instrument,  to  prevent  the  fraudulent  purpose. 
The  court  also  say  that  the  evidence  was  admissible  to  show 
a  trust  between  Hill  and  Ely  for  the  purpose  of  collecting  the 
notes  and  applying  the  proceeds  in  payment  for  the  coffee. 
They  recognize  the  leading  case  of  Hoare  v.  Graham,  3  Camp. 
57,  as  law,  but  distinguish  it  because  in  Hoare  v.  Graham 
there  was  no  allegation  of  fraud.  The  case  is  on  all  fours 
with  Downer  v.  Cheseborough.  In  both  there  was  an  antece- 
dent contract  which  raised  an  equity  dehors  the  instrument, 
which  made  the  attempt  to  enforce  the  contract  implied  by 
law  from  the  indorsement  a  fraudulent  one  relievable  in 
equity.  It  is  implied  in  both  decisions  that  in  a  case  like 
this,  where  no  equity  existed,  such  a  contract  could  not  be 
shown  by  parol. 

Hill  V.  Ely  was  not  overruled  or  shaken  by  the  subse- 
quent cases  cited.  Patterson  v.  Todd,  18  Penn.  St.  426, 
was  the  case  of  a  negotiable  note,  but  it  was  indorsed  by 
the  payee  when  overdue,  and  there  was  no  subsequent 
demand  and  notice.  The  main  question  in  the  case  was 
whether  such  a  demand  should  have  been  made  upon  the 
maker  and  notice  given  to  the  indorser.  It  was  held  that 
the  indorsement  was  equivalent  to  drawing  a  new  bill,  and 
that  demand  should  have  been  made  in  a  reasonable  time 
and  notice  given  of  the  dishonor.  The  court  also  held  that 
under  the  circumstances  of  that  case  the  defendant  might 
show  by  parol  evidence  that  he  said  he  would  not  warrant 
the  notes.  But  the  court  did  not  question  the  authority  of 
Hill  V.  Ely,  nor  does  it  appear  that  it  has  ever  been  ques- 
tioned. The  remaining  case  cited  from  Pennsylvania  was 
the  case  of  a  non-negotiable  note.  It  has  no  bearing  upon 
this  case. 

The  defendant  under  his  third  point  cites  a  case  from 


THE  STATE  BANK  v.  FEARING.  91 

Massachusetts,  and  dicta  from  Judge  Shaw.^  But  the  note 
in  that  case  was  not  negotiable,  and  the  case  and  dicta  are 
unimportant.  The  defendant  also  cites  one  English  case  — 
that  of  Pike  v.  Street,  Moody  &  Malkin,  227  —  in  support 
of  his  claim.  It  is  sufficient  to  say  of  that  case  that  it  is 
not  directly  upon  the  point,  is  contrary  to  the  present  cur- 
rent of  English  decisions,  and  was  questioned  in  the  recent 
case  of  Foster  v.  Jolly,  1  Cromp.  Mees.  &  R.  703. 

These  are  all  the  decisions  cited  by  the  defendant ;  and 
there  is  not  one  of  them  directly  in  point  which  can  be 
relied  upon  as  authority.  On  the  other  hand,  the  current  of 
decisions  in  England  is  directly  against  the  admission  of 
such  evidence.  Hoare  v.  Graham,  3  Camp.  57 ;  Goupy  v. 
Hardy,  7  Taunt.  159 ;  Free  v.  Hawkins,  8  Taunt.  92.  And 
the  adverse  decisions  in  this  country,  Avhich  are  directly  in 
point,  are  quite  numerous.  Bank  of  Albion  v.  Smith,  27 
Barb.  489;  Thompson  v.  Ketcham,  8  Johns.  14G;  Patterson 
V.  Hull,  9  Cowen,  747;  Payne  v.  Ladue,  1  Hill,  116;  Hall 
V.  Xewcombe,  7  Hill,  416;  Odam  v.  Beard,  1  Blackf.  191; 
Fuller  u.  :\[cDouald,  8  Greenl.  213 ;  Crocker  v.  Gretchel,  23 
Maine,  392;  Wilson  v.  Black,  6  Blackf.  509;  Barry  v. 
Morse,  3  N.  H.  132. 

The  Superior  Court  ^  must  therefore  be  advised  that  the 
plea  is  insufficient. 

THE   STATE   BAI^K   v.   FEARIXG. 

Supreme  Court  of  Massachusetts,  March,  1S3.5.     16  Pick.  533. 

A  bank  is  entitled  to  recover  against  the  second  indorser  of  a  note  dis- 
counted by  the  l)auk,  although  the  indorsement  of  tlie  name  of  the  payee 
is  a  forgery,  and  although  the  note  was  offered  for  discount  by  the  maker 
and  not  by  the  second  indorser. 

Assumpsit  on  a  promissory  note  for  the  sum  of  82.000, 
dated  April  15,  1833,  payable  to  the  order  of  Thomas  Jack- 

1  Riley  v.  Gerrish,  9  Cash.  104. 

'^  A  slip  for  Court  of  Common  Pleas. 


92  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

son,  junior,  in  six  months,  made  by  Charles  Brown,  and  in- 
dorsed with  tlie  names  of  the  payee  and  of  the  defendant. 

By  an  agreed  statement  of  facts,  it  appeared  that  the  sig- 
natures of  Brown  and  the  defendant  were  genuine,  but  that 
the  defendant  could  prove,  if  such  evidence  was  admissible, 
that  the  indorsement  of  the  name  of  the  payee  was  a  forgery  ; 
that  the  note  was  presented  by  Brown  to  the  plaintiffs  for 
discount,  in  the  usual  course  of  business,  and  discounted  by 
them  for  him ;  that,  at  the  time  of  such  discount,  the  plain- 
tiffs and  the  defendant  were  ignorant  of  the  forgery  ;  and 
that  due  notice  of  the  non-payment  of  the  note  was  given 
to  Brown,  Jackson,  and  the  defendant. 

If  upon  this  statement  of  facts  the  court  should  be  of 
opinion  that  the  plaintiffs  were  entitled  to  judgment,  the 
defendant  was  to  be  defaulted;  otherwise,  the  plaintiffs 
were  to  be  nonsuited. 

Shaw,  C.  J.,  for  the  court.  —  The  peculiar  features  of 
this  action  are,  that  the  plaintiffs  claim  of  the  second 
iudorser,  from  whom  they  immediately  took  the  note.  The 
question  is,  whether  the  forgery  of  the  indorsement  of  the 
name  of  a  prior  party  is  a  good  defence  to  the  note ;  and 
the  court  are  of  opinion  that  it  is  not. 

In  general  it  is  not  necessary  for  the  holder  to  prove  the 
signature  of  any  party  prior  to  the  party  whom  he  sues. 
The  reason  seems  to  be  obvious,  that  the  party  defendant, 
by  his  indorsement,  has  admitted  the  ability  and  the  signa- 
ture of  all  prior  parties.  Bayley  on  Bills,  813 ;  Critchlow  v. 
Parry,  2  Camp.  182.  The  effect  of  the  engagement  of  the 
indorser  is,  that  if  the  prior  parties  do  not  pay  the  note 
according  to  its  tenor  upon  due  presentment,  upon  notice  to 
him  he  will.  It  is  therefore  a  rule  upon  this  subject,  that 
a  yjlaintiff  is  under  no  obligation  to  prove  the  signature  of 
those  prior  to  the  party  intended  to  be  charged.  It  is  very 
different  where  he  claims  against  the  acceptor  of  a  bill  or 
maker  of  a  note.  They  respectively  promise  to  pay  to  the 
payee  or  his  order,  and  until  he  has  made  such  order  by  his 


ERWIN   V.  DOWNS.  93 

indorsement,  the  plaintiff  can  establish  no  title,  and,  to 
prove  such  order,  he  must  prove  the  genuineness  of  his  sig- 
nature. Smith  V.  Chester,  1  T.  E.  654 ;  Lambert  v.  Pack, 
1  Salk.  127.  So  an  acceptor  is  bound,  though  the  bill  be 
forged.     Jengs  v.  Fawler,  2  Strange,  9-46. 

The  circumstance  that  this  bill  was  offered  for  discount 
by  Brown  makes  no  difference ;  the  plaintiffs  had  a  right 
to  look  to  their  immediate  indorser,  and  if  satisfied  to  take 
the  note  on  his  credit,  he  is  liable  to  them ;  and  it  was  for 
him  to  see  that  he  has  a  good  remedy  over  against  those 
who  purport  to  be  prior  parties. 

Defendant  defaulted. 

ERWIN  V.  DOWNS. 

Court  of  Appeals  of  New  York,  June,  1857.     15  N.  Y.  575. 

An  indorsee  of  a  promissory  note  may  recover  against  an  indorser, 
though  the  former  took  the  note  with  knowledge  that  the  maker  was 
incompetent  to  contract. 

Action  upon  two  accommodation  promissory  notes  jointly  ■ 
made  by  the  same  persons,  each  note  payable  to  the  defend- 
ant, and  indorsed  by  him.  The  plaintiff  took  them  iov 
value  before  maturity.  Defence  that  the  makers  were  mar- 
ried women  when  they  signed  the  notes,  and  incompetent 
to  contract,  and  that  the  plaintiff  knew  the  fact  when  he 
took  the  notes.  There  had  been  due  demand  and  notice  of 
dishonor.  Judgment  for  the  plaintiff  on  report  of  referee ; 
the  defendant  appealed. 

Shankland,  J.,  for  the  court.  —  The  note  was  void,  as 
against  the  makers,  because  they  were  married  women,  and 
incapable  of  contracting  obligations  in  that  form.  But  when 
the  defendant  indorsed  the  note,  he  impliedly  contracted 
that  the  makers  were  competent  to  contract,  and  had  legally 
contracted,  the  obligation  of,  joint  makers  of  the  note. 
He  also  assumed  the  legal  obligation,  in  most  respects,  of 
the  drawers  of  a  bill.     The  fact,  known  to  the  plaintiff  at 


94  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

the  time  he  took  the  note,  that  the  makers  were  married 
women,  did  not  deprive  him  of  the  character  of  a  bona  fide 
purchaser ;  nor  does  the  payee's  knowledge  that  the  drawee 
is  a  married  woman  discharge  the  drawer  in  case  of  non- 
payment of  the  bill  by  the  drawee  ;  nor  is  the  iudorser  dis- 
charged, though  the  name  of  the  maker  is  forged.  1  Comst. 
113.  The  fact  is  not  found  that  the  plaintiff  was  aware  the 
note  was  accommodation  paper.  The  plaintiff  was  a  bona 
fide  purchaser  within  the  law  merchant.  Neither  the  com- 
plaint nor  the  finding  of  the  referee  tells  us  who  transferred 
the  notes  to  the  plaintiff.  The  legal  presumption  is,  that 
he  received  them  from  some  legal  holder  in  due  course  of 
business.  Judgment  affirmed, 

TOWNSEND  V.  BUSH. 
Supreme  Court  of  Connecticut,  November,  1814.     1  Conn.  260. 

A  party  to  a  negotiable  instrument,  who  is  divested  of  interest,  is  compe- 
tent to  prove  usury  in  the  inception  of  the  paper. 

Assumpsit  against  Bush  as  acceptor  of  a  bill  of  exchange 
drawn  by  Ebenezer  and  Atwater  Townsend,  and  payable  to 
the  plaintiffs  or  order.  There  was  also  a  count  for  money 
paid,  laid  out,  and  expended  for  the  defendant's  use.  De- 
fence, usury.  To  prove  this,  the  defendant  offered  the 
individuals  composing  the  firm  of  E.  &  A.  Townsend  as 
Avitnesses  ;  offering  also,  at  the  same  time,  to  show  that 
they  had  no  interest  in  this  suit,  being  discharged  from  all 
liability  on  the  bill  under  an  act  of  insolvency  in  the  State 
of  New  York.  The  plaintiffs  objected  on  the  ground  that 
said  parties  were  drawers  of  the  bill.  The  court  excluded 
the  witnesses,  and  directed  the  jury  to  find  a  verdict  for 
the  plaintiffs  ;  which  being  accordingly  done,  the  defendant 
moved  for  a  new  trial.  The  motion  was  reserved  for  the 
consideration  of  all  the  judges. 

Trumbull,  J.,  for  the  court. — The  principal  question  in 
this  case  is,  whether  Ebenezer  and  Atwater  Townsend,  the 


TOWNSEND  I'.  BUSH.  95 

drawers  of  the  bill  in  question,  are  admissible  witnesses  iu 
an  action  by  the  plaintiffs  as  payees  of  the  bill  against  the 
defendant  as  acceptor,  to  prove  that  it  was  executed  on  au 
usurious  contract,  and  therefore  is  void  in  law. 

The  rule  that  no  person  can  be  permitted  to  give  testi- 
mony to  invalidate  any  instrument  to  which  he  has  made 
himself  a  party  by  affixing  his  signature,  in  cases  wherein 
he  has  no  interest  in  the  event  of  the  suit  on  trial,  was  first 
adopted  in  the  case  of  Walton  v.  Shelley,  1  Durn.  &  East, 
296,  by  Lord  Mansfield,  and  the  other  judges  of  the  King's 
Bench.  He  states  that  '  the  rule  is  founded  in  public  pol- 
icy ;  that  there  is  a  sound  reason  for  it,  because  every  man 
who  is  a  party  to  an  instrument  gives  a  credit  [to]  it;  that 
it  is  of  consequence  to  mankind  that  no  person  should  hang  -y 

out  false  colors  to  deceive  them,  by  first  affixing  his  signa-  \ 
ture  to  a  paper,  and  then  afterwards  giving  testimony  to 
invalidate  it ;  that  it  is  emphatically  right  in  case  of  notes, 
because,  in  consequence  of  different  statutes,  two  very  hard 
cases  have  arisen  :  first,  with  respect  to  a  gaming  note, 
which,  though  in  possession  of  a  bona  fide  purchaser  with- 
out notice  is  void ;  and,  in  the  case  of  usury,  a  note  given 
for  a  usurious  consideration,  though  in  the  hands  of  a  fair 
indorsee,  is  equally  void ;  and  therefore,  whenever  a  man 
signs  these  instruments,  he  is  always  understood  to  say  that 
to  his  knowledge  there  is  no  legal  objection  to  them  what- 
ever.' He  then  quotes  the  maxim  of  the  civil  law,  nemo 
suam  allegans  turpitudinem  est  audiendus,  and  applies  it  as 
conclusive  on  the  present  point.  The  other  judges  con- 
curred, and  established  this  as  a  general  rule  of  law. 

The  English  courts  soon  found  the  principle  was  laid 
down  on  too  broad  a  scale,  and  narrowed  it  in  its  applica- 
tion to  negotiable  instruments  only,  i^o  new  or  additional 
reasons  were  ever  adduced  in  its  support.  It  was  adhered 
to  on  the  grounds  stated  by  Lord  Mansfield,  and  the  author- 
ity of  the  decision  in  that  case.  But,  at  length,  the  rule 
was  exploded  in  the  King's  Bench,  and  such  a  witness  de- 
termined to  be  admissible,  unless  interested  in  the  event  of 


96  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

the  suit  on  trial.     See  Jordaine  v.  Laslibrooke,   7  Durn.  & 
East,  601. 

As  the  decisions  of  the  highest  court  and  ablest  judges 
at  Westminster  Hall  have  been  thus  directly  contradictory, 
and  as  their  principle  (notwithstanding  the  dicta  of  several 
of  the  judges  in  Allen  v.  Holkins,  1  Day's  Cases  in  Error, 
p.  17,  adopting  the  rule  as  sound  law,  and  the  decision  in 
"Webb  V.  Danforth,  p.  301,  denying  its  application  as  to  facts 
subsequent  to  the  execution  of  the  instrument)  iias  never 
till  now  come  directly  in  question  before  the  highest  courts 
in  this  State,  it  is  our  duty  to  decide  it  according  to  the 
general  rules  and  principles  of  law  respecting  admissibility 
of  testimony  ;  and  if  the  grounds  and  reasons  in  Walton  v. 
Shelley  are  found  to  be  fallacious,  we  cannot  consider  the 
case  and  its  authority  conclusive. 

The  first  ground  Lord  Mansfield  takes  is,  that  every  per- 
son who  signs  an  instrument  thereby  gives  it  a  credit,  and 
can  never  be  admitted  to  dispute  its  validity.  Before  we 
adopt  this  principle  of  universal  exclusion  and  estoppel,  we 
must  inquire  what  credit  each  several  party,  by  putting  his 
signature  upon  a  negotiable  instrument,  thereby  gives  to 
it,  and  what  obligation  he  thereby  incurs  ;  for  each  signer 
stands  on  a  different  ground. 

The  drawer  of  a  bill  or  negotiable  note  acknowledges 
himself  indebted  to  the  payee  to  the  amount  of  the  sum  it 
contains,  and  engages  to  pay  the  damages,  in  case  the  bill 
shall  be  dishonored,  or  the  note  uncollected,  without  the 
fault  of  the  payee  or  of  those  to  whom  it  may  be  indorsed. 
The  indorser  of  a  bill  or  note  acknowledges  his  receipt  of  a 
valuable  consideration,  and  contracts  to  pay  the  sum,  in 
case  it  cannot  be  obtained  of  the  drawer.  The  acceptor 
acknowledges  it  to  be  duly  drawn;  he  is  not  admitted  to 
deny  the  handwriting  of  the  drawer;  and  he  contracts  to 
pay  the  sum  according  to  its  contents  to  the  legal  holder. 

These  are  the  rules  and  principles  of  common  law  as 
adopted  and  sanctioned  by  the  courts  in  this  State. 

The  indorsee  or  holder  of  a  negotiable  security  has  noth- 


TOWNSEND  V.  BUSH.  97 

iug  to  do  with  the  transaction  between  the  original  parties. 
See  Jordaine  v.  Lashbrooke.  Xor  lias  the  drawer  or 
acceptor  anything  more  to  do  with  the  contracts  between 
subsequent  indorsers  and  indorsees.  Each  party  is  bound 
only  so  far  as  his  own  obligation  extends,  and  cannot  be 
precluded  from  denying  any  fact  not  acknowledged  by 
his  signature.  All  these  contracts  are  separate  and  inde- 
pendent. Xo  party  by  his  signature  warrants  the  validity 
of  any  contract  but  his  own,  or  gives  any  further  credit 
to  the  security,  or  is  interested  in  the  event  of  any  suit  on 
the  several  contracts  of  other  parties,  whose  nam*es  may 
appear  on  the  instrument.  He  warrants  nothing  further 
with  respect  to  the  validity  of  the  draft,  he  hangs  out  no 
false  colors,  and  is  not  estopped  by  his  signature  from 
testifying  to  any  facts  respecting  the  instrument,  or  any 
legal  objections  within  his  knowledge. 

The  only  fundamental  principle  of  the  common  law 
applicable  to  the  present  question  is  this,  that  no  man 
can  be  a  witness  in  his  own  cause;  and  this  rule  hath 
ever  been  considered  as  applicable  to  every  case  in  which 
he  is  a  party,  or  is  interested,  and  to  no  others.  It  was 
formerly  holden  as  well  in  the  Euglish  courts  as  our  own, 
that  an  interest  in  the  question  was  a  sufficient  ground  for 
excluding  a  witness.  It  is  now  settled  law  in  both,  that 
an  interest  in  the  event  of  the  suit  is  the  only  ground  on 
which  he  can  be  rejected;  and  that  a  mere  interest  in  the 
question  does  not  affect  his  competency,  but  his  credit 
with  the  jury  only.  But  this  distinction  was  not  fully 
settled  at  the  time  the  case  of  Walton  v.  Shelley  was  tried. 
Justice  Buller,  though  he  concurred  in  the  principle  that 
no  man  can  invalidate  his  own  security,  relied  much  in  his 
argument  on  the  fact  that  the  witness  was  interested  in 
the  question,  because  the  question  put  to  him  was  upon 
the  validity  of  the  notes  he  had  indorsed;  although  he 
clearly  was  not  interested  in  the  event  of  the  suit  on  trial, 
as  it  must  be  uncertain  whether  he  would  ever  be  sub- 
jected   to   a   subsequent    action    on   the    instrument,    was' 

7 


98  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

already  liable  on  his  signature,  and  could  never  give  the 
verdict  in  evidence  in  his  favor. 

The  maxim  of  the  civil  law,  that  no  man  is  to  be  heard 
who  alleges  his  own  turpitude  or  crime,  was  never  by  any 
court  or  judge,  before  Lord  Mansfield,  applied  to  the 
inadmissibility  of  a  witness,  but  only  to  the  rights  of  the 
parties  in  a  suit  or  action.  2S"o  suitor  can  support  a  claim 
in  which  the  ground  or  consideration  is  an  unlawful  act  of 
his  own  ;  nor  can  any  defendant  be  heard  on  a  defence 
grounded  on  his  own  unlawful  act.  But  an  accomplice  in 
a  crime,  a  fraud,  or  any  illegal  transaction,  was  always  an 
admissible  witness,  unless  immediately  interested  in  the 
suit.  1  may  further  observe  that  the  term  '  turpitude  ' 
can  with  no  propriety  be  applied  to  an  act  not  malum  in 
se,  but  only  malum  prohibitum  by  force  of  some  statute, 
making  it  penal  in  some  particular  country  or  jurisdiction. 

In  Jordaine  v.  Lashbrooke,  Lord  Kenyon  says :  '  The  rule 
contended  for  is  this :  Whatever  fraud  may  have  been  com- 
mitted, if  the  party  to  the  fraud  can  get  on  the  instrument 
the  name  of  the  person  who  may  be  the  only  witness 
to  the  transaction,  he  will  stand  entrenched  within  the 
forms  of  law,  and  impose  silence  on  that  only  witness, 
though  he  be  a  person  of  unimpeachable  character,  and 
not  interested  in  the  cause.'  This  he  denies  to  be  law. 
Grose,  Justice,  says:  'Let  the  plaintiff  in  this  case  resort 
to  his  indorser  to  recover  back  the  consideration  he  gave 
for  the  bill.' 

Indeed,  if  a  man  sell  and  indorse  a  note  executed  by  an 
infant,  or  feme  covert,  and  void  at  common  law,  or  void 
by  statute  as  being  usurious,  unstamped,  or  a  forgery,  I 
see  no  legal  defence  he  can  set  up  against  an  action  of 
assumpsit  by  the  indorser  for  the  money  paid  on  a  consi- 
deration which  has  wholly  failed.  For  that  is  not  an  action 
on  the  bill  or  note,  but  rests  entirely  on  the  ground  that 
the  note  is  void  in  law.  If  such  an  action  can  be  sup- 
ported, there  is  no  hardship  in  the  case  of  an  innocent 
purchaser;    he   has   his    remedy.      If   in   any   case   he    is 


TOWNSEXD   V.  BUSH.  99 

deprived  of  every  legal  remedy,  no  court  can  liave  a  right, 
in  compassion  to  the  hardship  of  his  situation,  to  assist 
him  in  evading  the  law  by  excluding  such  witnesses  or 
evidence  as  are  admissible  in  all  other  cases. 

The  hardship  upon  the  innocent  indorsee,  which  seems 
so  strongly  to  have  influenced  the  mind  of  Lord  ISIansfield, 
IS  indeed  no  more  than  this :  by  the  statutes  to  which  he 
refers,  all  bills  or  notes,  where  the  consideration  is  money 
lent  on  usury  or  for  gaming,  are  declared  void  to  all  intents 
and  purposes  whatever;  and,  consequently,  the  indorsee, 
whenever  he  brings  his  suit  on  the  note  or  bill  itself 
against  the  drawer,  promisor,  or  acceptor,  must  fail  of  a 
recovery  in  that  action.  But  he  is  not  without  remedy; 
for,  if  a  fair  and  bona  fide  purchaser  without  notice,  he 
may  recover  of  the  indorser  on  his  indorsement.  Bowyer 
V.  Bampton,  2  Stra.  1155. 

In  the  case  of  Lowe  and  Others  v.  Waller,  Doug.  736, 
in  which  all  the  former  cases  are  well  considered.  Lord 
Mansfield  himself  says:  'It  is  better  that  the  law  should 
be  as  it  is  with  respect  to  bills  and  notes  than  other  secu- 
rities; because  they  are  generally  payable  in  a  short  time, 
so  that  the  indorsee  has  an  early  opportunity  of  recurring 
to  the  indorser,  if  he  cannot  recover  on  the  bill.'  I  am 
therefore  of  opinion  that  the  witnesses  offered  are  admis- 
sible, notwithstanding  they  have  put  their  signature  upon 
the  bill. 


Swift,  J.,  delivered  a  concurring  opinion. 


'I 


100  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 


MUSSOX   V.   LAKE. 
Supreme  Court  of  the  United  States,  December,  1845.    4  How.  262. 


The  notary  should  present  tlie  paper  wlieu  he  demands  payment. 
A  protest  which  only  states  that  payment  was  demanded  is  not  evidence 
to  prove  presentment. 

The  case  is  stated  in  the  opinion  of  the  court. 

McKiNLEY,  J.,  for  the  court.  — The  plaintiffs  brought  an 
action  of  assumpsit,  in  the  Circuit  Court  of  tlie  United 
States  for  the  Southern  District  of  Mississippi,  against 
the  defendant,  as  indorser  of  a  bill  of  exchange,  drawn  at 
Vicksburg,  in  said  State,  by  Steele,  Jenkins,  &  Co.,  for 
^6,133,  payable  twelve  months  after  the  first  day  of 
February,  1837,  to  R.  H.  and  J.  H.  Crump,  and  addressed 
to  Kirkman,  Rosser,  &  Co.,  at  New  Orleans,  and  by  them 
afterwards  accepted,  and  indorsed  by  the  payees  and  the 
defendant. 

On  the  trial  of  the  cause,  the  plaintiffs  offered  to  read  as 
evidence  to  the  jury  a  protest  of  the  bill  of  exchange,  to 
the  reading  of  which  the  defendant  objected;  because  it 
did  not  appear  in  the  protest  that  the  notary  had  pre- 
sented the  bill  to  the  acceptors,  or  either  of  them,  when 
he  demanded  payment  thereof.  And  upon  the  question, 
whether  the  protest  ought  to  be  read  to  the  jury  as 
evidence  of  a  presentment  of  the  bill  to  the  acceptors 
for  payment,  or  as  evidence  of  the  dishonor  of  the  bill, 
the  judges  were  opposed  in  opinion:  which  division  of 
opinion  they  ordered  to  be  certified  to  this  court;  and 
upon  that  certificate  the  question  is  now  before  us  for 
determination. 

The  indorser  of  a  bill  of  exchange,  whether  payable 
after  date  or  after  sight,  undertakes  that  the  drawee  will 
pay  it,  if  the  holder  present  it  to  him  at  maturity  and 
demand  payment;  and  if  he  refuse  to  pay  it,  and  the 
holder  cause  it  to  be  protested,  and  due  notice  to  be  given 


MUSSON   V.  LAKE.  101 

to  the  iudorser,  then  he  promises  to  pay  it.  All  these  con- 
ditions enter  into  and  make  part  of  the  contract  between 
these  parties  to  a  foreign  bill  of  exchange  ;  and  the  law 
imposes  the  performance  of  them  upon  the  holder,  as  con- 
ditions precedent  to  the  liability  of  the  indorser  of  the  bill. 
A  presentment  to  and  demand  of  payment  must  be  made 
of  the  acceptor  personally,  at  his  place  of  business  or  his 
dwelling.  Story,  Bills,  §  325.  Bankruptcy,  insolvency, 
or  even  the  death  of  the  acceptor  will  not  excuse  the 
neglect  to  make  due  presentment;  and  in  the  latter  case 
it  should  be  made  to  the  personal  representatives  of  the 
deceased.  Chitty,  Bills,  7th  London  ed.  246,  247;  Story, 
Bills,  360;  5  Taunt.  30;  12  Wend.  439;  2  Douglass,  515; 
Warrington  v.  Furbor,  8  East,  242,  245;  Esdaile  v. 
Sowerby,  11  East,  117;  14  East,   500. 

The  reasons  why  presentment  should  be  made  to  the 
drawee  are,  first,  that  he  may  judge  of  the  genuineness  of 
the  bill;  secondly,  of  the  right  of  the  holder  to  receive 
the  contents;  and,  thirdly,  that  he  may  obtain  immediate 
possession  of  the  bill  upon  paying  the  amount.  And  the 
acceptor  has  a  right  to  see  that  the  person  demanding  pay- 
ment has  a  right  to  receive  it,  before  he  is  bound  to  answer 
whether  he  will  pay  it  or  not  ;  for,  notwithstanding  his 
acceptance,  it  may  have  passed  into  other  hands  before  its 
maturity.  And  he,  as  well  as  the  drawee,  has  a  right  to 
the  possession  of  the  bill  upon  paying  it,  to  be  used  as  a 
voucher  in  the  settlement  of  accounts  with  the  drawer. 
Story,  Bills,  §  361;  Hansard  v.  Robinson,  7  Barn.  & 
C.  90. 

Mr.  Justice  Story  has  given  the  form  of  a  protest  now 
in  use  in  England,  in  his  treatise  on  Bills  of  Exchange,  by 
which  it  will  be  seen  that  the  words  '  did  exhibit  said  bill ' 
are  used,  and  a  blank  is  left  to  be  filled  up  with  'the  pre- 
sentment, and  to  whom  made,  and  the  reason,  if  assigned, 
for  non-payment.'  Story,  Bills,  302,  note.  This,  with 
the  authorities  alread}^  referred  to,  shows  that  the  protest 
should  set  forth  the  presentment  of  the  bill,  the  demand 


102  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

of  payment,  and  the  answer  of  the  drawee  or  acceptor. 
The  holder  of  the  bill  is  the  proper  person  to  make  the 
presentment  of  it  for  payment  or  acceptance.  Stor}-, 
Bills,  §  360.  But  the  law  makes  the  notary  his  agent  for 
the  purpose  of  presenting  the  bill,  and  doing  whatever  the 
holder  is  bound  to  do  to  fix  the  liability  of  the  indorser. 
Everything,  therefore,  that  he  does  in  the  performance  of 
this  duty  must  appear  distinctly  in  his  protest.  He  is  the 
officer  of  a  foreign  government;  the  proceeding  is  ex  parte; 
and  the  evidence  contained  in  the  protest  is  credited  in  all 
foreign  courts.  Chitty,  Bills,  215;  Eogers  v.  Stevens, 
2  T.  R.  713;  Brough  v.  Parkings,  2  Ld.  Raym.  993;  Orr 
V.  Maginnis,  7  East,  359;  Chesmer  v.  Noyes,  4  Camp.  129. 
The  evidence  contained  in  the  protest  must,  therefore, 
stand  or  fall  upon  its  own  merits.  It  rests  upon  the  same 
footing  with  parol  evidence ;  and,  if  it  fails  to  make  full 
proof  of  due  diligence  on  the  part  of  the  plaintiff,  it  must 
be  rejected. 

But  the  counsel  for  the  plaintiffs  insists  that  the  statute 
of  Louisiana  and  the  interpretation  given  to  it  by  the 
Supreme  Court  of  that  State  in  the  case  of  Nott's  Executor 
V.  Beard,  16  La.  308,  have  so  changed  the  law  merchant 
as  to  render  unnecessary  the  presentment  of  a  foreign  bill 
for  payment.  After  a  careful  examination  of  the  opinion 
of  the  court  in  that  case,  we  are  unable  to  perceive  an}- 
intention  manifested  to  depart  from  the  settled  usages  of 
the  law  merchant;  but,  on  the  contrary,  they  attempt  by 
argument  and  authority  to  bring  the  case  within  that  law. 
The  question  before  that  court  was  the  identical  question 
now  before  us.  The  protest  was  objected  to  because  it  did 
not  show  that  the  bill  had  been  presented  by  the  notary  to 
the  acceptors  for  payment.  To  this  objection,  that  court 
said  it  might  perhaps  have  been  more  specific,  if,  in  the 
protest,  it  had  been  stated  that  the  bill  was  presented, 
and  payment  thereof  demanded.  And  they  admit  the  law 
is  well  settled,  that,  before  the  holder  of  an  accepted  bill 
can  call  on  the  drawer  for  payment  he  must  make  a  pre- 


MUSSON  V.  LAKE.  103 

sentment  for,  or  cleuiaud  of  payment,  and  give  notice  of 
the  refusal.  Here,  then,  is  a  definite  proposition,  assert- 
ing that  a  presentment  for  payment  and  a  demand  of  pay- 
ment are  convertible  terms,  and  that  the  proof  of  either 
would  be  sufficient. 

To  support  this  proposition,  they  refer  to  Chitty  on 
Bills,  and  Bayley  on  Bills,  and  the  annotators  on  them. 
And  as  further  proof  and  illustration,  and  to  show  that 
demand  of  payment  should  be  preferred  to  presentment  for 
payment,  they  refer  to  the  statute  of  Louisiana,  passed  in 
1827,  in  which  they  say  the  word  'demand'  is  used  in  it, 
and  that  the  word  'presentment '  is  not  ;  and  they  refer  to 
the  statute,  also  to  show  that  notaries  were  vested  with 
certain  powers  by  it,  which  gave  authority  to  their  acts; 
and  that  tliey  being  public  crfficers,  the  presumption  of  law 
is,  that  they  do  their  duty;  and  therefore,  if  the  protest 
were  defective,  and  liable  to  the  objection  urged  against 
it,  this  presumption  of  law  would  cover  all  such  defects. 
This  is  substituting  presumption  for  proof,  in  violation  of 
all  the  rules  of  evidence. 

With  all  due  respect  for  that  distinguished  tribunal,  we 
are  constrained  to  dissent  from  the  general  proposition 
they  have  laid  down  on  the  subject  of  demand  and  present- 
ment, and  from  all  their  reasoning  in  support  of  it.  Due 
diligence  is  a  question  of  law;  and  we  think  we  have 
shown,  by  abundant  authority,  that  the  holder  of  an 
accepted  bill,  to  fix  the  liability  of  the  drawer  or  indorser, 
must  present  it  to  the  acceptor  and  demand  payment 
thereof.  It  may  be  well  here  to  repeat  what  Lord  Ten- 
terden,  C.  J.,  said  on  this  subject,  in  delivering  the 
judgment  of  the  Court  of  King's  Bench,  in  the  case  of 
Hansard  v.  Eobinson,  before  referred  to.  He  said:  'The 
general  rule  of  the  English  law  does  not  allow  a  suit  by 
the  assignee  of  a  chose  in  action.  The  custom  of  mer- 
chants, considered  as  part  of  the  law,  furnishes  in  this 
case  an  exception  to  the  general  rule.  What,  then,  is 
the  custom  in  this  respect?     It  is,  that  the  holder  of  the 


104  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

bill  shall  present  the  instrument,  at  its  maturity,  to  the 
acceptor,  demand  payment  of  its  amount,  and,  upon  receipt 
of  the  money,  deliver  up  the  bill.  The  acceptor  paying 
the  bill  has  a  right  to  the  possession  of  the  instrument  for 
his  own  security,  and  as  his  voucher  and  discharge  pro 
tanto,  in  his  account  with  the  drawer.  If,  upon  an  offer 
of  payment,  the  holder  should  refuse  to  deliver  up  the  bill, 
can  it  be  doubted  that  the  acceptor  might  retract  his  offer, 
or  retain  his  money  ?  '  This  extract,  we  think,  furnishes 
a  full  answer  to  all  that  has  been  said  by  the  Supreme 
Court  of  Louisiana  to  prove  that  it  is  not  necessary  to 
present  the  bill  to  the  acceptor  for  payment;  and  to  the 
presumption  of  law  relied  on  to  cure  the  defects  in  the 
protest. 

But  to  show  that,  by  the  statute  of  Louisiana,  the  pre- 
sentment of  a  bill  to  the  acceptor  for  payment  is  not 
dispensed  with,  and  that  the  presentment  is,  by  a  fair 
construction  of  the  act,  as  much  within  its  true  intent  and 
meaning  as  the  demand,  we  proceed  to  examine  its  pro- 
visions. The  principal  object  of  the  legislature  in  passing 
this  statute  seems  to  have  been  to  give  authority  to  nota- 
ries to  give  notices,  in  all  cases  of  protested  bills  and 
promissory  notes;  and  to  make  their  certificates  evidence 
of  such  notices.  And,  therefore,  all  that  is  said  on  the 
subject  of  the  demand  and  the  manner  of  making  it,  and 
the  other  circumstances  attending  it,  was  not  intended  as 
a  new  enactment  on  these  subjects,  but  as  inducement  to 
the  i^owers  conferred  on  the  notary,  which  was  the  princi- 
pal object  of  the  statute,  as  will  appear,  we  think,  by 
reading  it.  That  part  of  it  which  relates  to  this  subject 
is  in  these  words:  '  That  all  notaries,  and  persons  acting 
as  such,  are  authorized,  in  their  protests  of  bills  of 
exchange,  promissory  notes,  and  orders  for  the  payment 
of  money,  to  make  mention  of  the  demand  made  upon  the 
drawee,  acceptor,  or  person  on  whom  such  order  or  bill  of 
exchange  is  drawn  or  given,  and  of  the  manner  and  cir- 
cumstances of  such  demand;  and  by  certificate,  added  to 


MUSSON  c.  LAKE.  105 

such  protest,  to  state  the  manner  in  Avhich  any  notices  of 
protest  to  drawers,  indorsers,  or  other  persons  interested 
were  served  or  forwarded;  and  whenever  they  shall  have 
so  done,  a  certified  copy  of  such  protest  and  certificate 
shall  be  evidence  of  all  the  notices  therein  stated. ' 

It  seems  to  have  been  taken  for  granted  by  the  legisla- 
ture that  the  notaries  knew  how  to  make  out  a  protest,  and 
therefore  they  did  not  prescribe  the  form,  but  gave  the 
substance  of  it,  to  which  the  notary  was  required  to  add  a 
certificate  of  tlie  manner  in  which  he  had  given  notices; 
and  when  done,  according  to  the  statute,  a  certified  copy 
of  the  protest  and  certificate  should  be  evidence,  not  of  the 
demand  and  manner  and  circumstances  of  the  demand,  but 
of  the  notice  onl3\  This  shows  that  the  intention  of  the 
legislature,  in  passing  this  part  of  the  statute,  was  merely 
to  authorize  the  notaries  to  give  notices,  and  to  make  the 
copy  of  the  protest,  and  the  certificate  added  to  it,  evi- 
dence of  notice  in  the  courts  of  Louisiana.  But,  indepen- 
dent of  this  view  of  the  subject,  we  think  the  language 
employed  in  this  statute  includes  the  presentment  of  the 
bill  for  payment,  and  for  all  other  purposes,  as  fully  as  it 
does  the  demand  of  payment.  In  giving  construction  to 
the  act,  the  phrase,  '  and  of  the  manner  and  circumstances 
of  such  demand,'  cannot  be  rejected,  but  must  receive  a 
fair  interpretation.  When  taken  in  connection  with  other 
parts  of  the  statute,  what  do  these  words  mean?  The 
manner  of  making  a  demand  of  paj'ment,  we  have  seen,  is 
by  presenting  the  bill  to  the  drawee  or  acceptor;  and  so 
important  is  this  part  of  the  proceeding,  that  the  omission 
to  present  the  bill  to  the  acceptor  will  justify  his  refusal 
to  pay  it,  although  payment  be  demanded.  The  legisla- 
ture cannot  be  presumed  to  have  intended  to  make  so 
important  a  change  in  the  law  merchant  as  that  ascribed 
to  them  by  the  counsel  for  the  plaintiffs,  without  at  the 
same  time  providing  some  other  mode  of  obtaining  the 
acceptance  and  payment  of  bills  of  exchange,  and  of  hold- 
ing drawers  and  indorsers  to  their  liabilities.     It  is  but 


106  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

reasonable,  therefore,  to  give  to  the  phrase  before  referred 
to  such  construction,  if  practicable,  as  will  leave  the  law 
merchant  as  it  stood  before  the  passage  of  the  statute,  and 
carry  into  effect  the  main  intention  of  the  legislature. 
This,  we  think,  may  fairly  be  done  without  doing  any 
violence  to  the  intention  or  the  language  of  the  statute. 

The  manner  of  the  demand  must,  therefore,  mean  the 
presentment  of  the  bill  for  either  acceptance  or  payment; 
and  the  circumstances  of  the  demand,  we  think,  means  the 
place  where  the  presentment  and  demand  is  made,  and  the 
person  to  whom  or  of  whom  it  is  made,  and  the  answer 
made  by  such  person.  It  is  very  clear,  that  bills  payable 
at  sight,  and  after  sight,  are  within  the  meaning  of  the 
statute;  because  it  provides  for  a  demand  of  payment  of 
the  acceptor  of  a  bill.  Now,  how  can  there  be  an  acceptor 
of  a  bill,  without  a  presentment  for  acceptance?  Until 
the  bill  become  due,  payment  cannot  be  demanded  of  the 
drawee.  This  shows  that,  without  the  word  'present- 
ment' and  the  word  'demand'  also,  the  plain  meaning  of 
the  statute  could  not  be  carried  into  effect.  A  bill  payable 
at  a  fixed  period  after  its  date  need  not  be  presented  for 
acceptance :  it  is  sufficient  to  present  it  and  demand  pay- 
ment when  it  arrives  at  maturity;  but  a  bill  payable  at 
sight,  or  after  sight,  can  never  become  due  until  after  it 
has  been  accepted.  How  is  the  holder  or  the  notary  to 
obtain  the  acceptance  of  such  a  bill,  under  the  decision  of 
the  Supreme  Court  of  Louisiana?  Will  it  be  sufficient  to 
demand  payment  of  the  bill?  That  would  be  a  nugatory 
act,  because  it  is  not  due;  then  it  must  be  admitted  that, 
by  fair  and  necessary  construction,  the  word  'presentment' 
is  within  the  plain  meaning  and  intention  of  the  statute, 
and  that  the  bill  may  be  presented  for  acceptance  or  for 
payment,  and  therefore  neither  the  statute  nor  the  decision 
of  the  Supreme  Court  of  Louisiana  has  changed  the  law 
merchant  in  any  of  these  respects. 

There  is,  however,  another  question,  entirely  indepen- 
dent of  the  statute  and  the  decision  of  the  Supreme  Court 


MUSSON  V.  LAKE.  107 

of  Louisiana,  which  may  be  decisive  of  the  case  before  this 
court;  and  that  question  is,  whether  the  contract  between 
tlie  holder  and  indorser  of  the  bill  in  controversy  is  to  be 
governed  by  the  law  of  Louisiana,  where  the  bill  was  pay- 
able, or  by  the  law  of  Mississippi,  where  it  was  drawn  and 
indorsed.  The  place  where  the  contract  is  to  be  per- 
formed is  to  govern  the  liabilities  of  the  person  who  has 
undertaken  to  perform  it.  The  acceptors  resided  at  iSTew 
Orleans;  they  became  parties  to  the  bill  by  accepting  it 
there.  So  far,  therefore,  as  their  liabilities  were  con- 
cerned, they  were  governed  by  the  law  of  Louisiana.  But 
the  drawers  and  indersers  resided  in  Mississippi;  the  bill 
was  drawn  and  indorsed  there;  and  their  liabilities,  if 
any,  accrued  there.  The  undertaking  of  the  defendant 
was,  as  before  stated,  that  the  drawers  should  pay  the  bill ; 
and  that  if  the  holder,  after  using  due  diligence,  failed  to 
obtain  payment  from  them,  he  would  pay  it,  with  interest 
and  damages.  This  part  of  the  contract  was,  by  the  agree- 
ment of  the  parties,  to  be  performed  in  Mississippi,  where 
the  suit  was  brought,  and  is  now  depending.  The  con- 
struction of  the  contract,  and  the  diligence  necessary  to  be 
used  by  the  plaintiffs  to  entitle  them  to  a  recovery,  must, 
therefore,  be  governed  by  the  laws  of  the  latter  State. 
Story,  Bills,  §  366;  4  Peters,  123;  2  Kent,  Comm.  459; 
13  Mass.  4;  12  Wend.  439;  Story,  Bills,  §  76;  4  Johns. 
119;  12  Johns.  142;  5  East,  124;  3  Mass.  81;  3  Cowen, 
154;  1  Cowen,  107;  5  Cranch,  298. 

Whatever,  therefore,  may  have  been  the  intention  of  the 
legislature  in  passing  the  statute,  and  of  the  Supreme 
Court  of  Louisiana  in  the  decision  of  the  case  referred  to, 
neither  can  affect,  in  the  slightest  degree,  the  case  before 
us.  In  Mississippi,  the  custom  of  merchants  has  been 
adopted  as  part  of  the  common  law ;  and  by  that  law  and 
their  statute  law  this  case  must  be  governed.  We  think, 
therefore,  the  protest  offered  by  the  plaintiff,  as  evidence 
to  the  jury,  ouglit  not  to  have  been  received  as  evidence  of 
presentment  of  the  bill  to  the  acceptors  for  payment,  nor 


108  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

as  evidence  of  the  dishonor  of  the  bill;  which  is  ordered  to 
be  certified  to  the  Circuit  Court  accordingly. 

McLean  and  Woodbury,  JJ.,  dissented  as  to  the  effect  of  the 
protest,  regarding  it  as  sufficient  evidence  of  presentment.  They 
agreed  with  the  majority  as  to  tlie  necessity  of  presentment,  the 
chief  point  intended  to  be  illustrated  here. 


WEST  V.   BROWK 
Supreme  Court  of  Ohio,  December,  1856.     6  Ohio  St.  542. 

A  note  payal)le  generally  may  be  sent  to  a  bank  before  maturity  for 
coUectiou,  and  the  bank  may  then  give  notice  of  the  fact  to  the  maker  and 
require  him  to  come  there  and  make  payment. 

A  room,  in  the  office  of  another,  Ijeiug  one's  ouly  place  for  receiving 
business  calls,  and  being  a  place  at  which  one  gives  notice  that  word  left 
there  will  find  one,  is  a  proper  place  for  making  demand  of  payment. 

The  case  is  stated  in  the  opinion. 

BowEN,  J.,  for  the  court. — The  suit  below  was  on  the 

following  note : 

'  Cincinnati,  Nov.  20,  1854. 

'  Three  months  after  date  I  promise  to  pay  to  the  order 
of  Samuel  West  one  hundred  and  fifty  dollars,  value  re- 
ceived. 

*  (Signed)  Joseph  B.  Babcock. 

'  (Indorsed)  Samuel  West.' 

The  note  was  discounted  by  the  defendant  and  proceeds 
paid  to  Babcock,  the  maker.  It  was  afterward  left  at  the 
Union  Bank  for  collection.  Notice  was  sent  by  the  bank 
to  Babcock  some  time  before  it  matured,  that  this  note 
would  fall  due  on  the  23d  of  February,  1855,  at  said 
Union  Bank. 

Babcock  resided  in  the  eastern  part  of  the  city.  He  had 
no  place  of  business  exclusively  his  own.  He  was  allowed 
to  occupy  the  office  of  Mr.  Harding,  on  Vine  street,  which 
was  the  place  where  he  received  business  calls  and  directed 


WEST   V.  BROWN.  109 

them  to  be  made.  The  business  of  Babcock  at  the  time 
was  that  of  a  small  vender  of  pamphlets  and  periodicals  in 
the  streets  of  the  city.  He  had  told  persons  that  informa- 
tion left  for  him  at  Harding's  would  find  him.  The  notary 
public  states  that  he  went  to  the  said  office  of  Babcock,  on 
Vine  street,  between  four  and  five  o'clock  p.  m.,  on  the  23d 
of  February,  and  demanded  payment  of  the  note.  He  was 
told  there  were  no  funds  there  to  pay,  and  that  Mr.  Bab- 
cock was  out  ;  whereupon  he  protested  the  note  for  non- 
payment, and  on  the  next  day  he  put  a  notice  in  the  post- 
office  for  West,  the  indorser,  directed  to  him  at  Milford, 
Ohio.  West  received  the  notice  on  the  27th  or  28th  of 
February,  postmarked  Cincinnati,  February  26.  The  notary 
says  that  he  is  confident  that  he  mailed  the  notice  to  West 
before  nine  o'clock  on  the  day  after  the  protest,  and  that 
early  business  in  Cincinnati,  at  that  season  of  the  year,  did 
not  commence  before  seven  or  eight  o'clock  in  the  morning. 
Milford  is  fifteen  miles  from  Cincinnati,  and  it  was  shown 
that  the  mail  was  closed  daily,  for  that  place,  at  five  o'clock 
a.  m.,  and  that  all  letters  put  into  the  office  after  that 
hour,  for  jNIilford,  would  not  go  until  the  next  mail ;  that 
in  this  case  the  next  mail  day  was  Monday,  the  26th  of 
February.  Sunday,  the  25th,  intervened,  when  there  was 
no  mail. 

West  was  an  accommodation  indorser  for  Babcock. 

The  cause  was  submitted  to  the  court  below  as  to  West, 
and  a  judgment  found  for  the  plaintiff,  when  the  defendant 
moved  the  court  to  grant  him  a  new  trial,  which  motion 
was  refused,  and  a  bill  of  exceptions  was  tendered  and 
allowed.     Judgment  was  taken  by  default  against  Babcock. 

Two  points  are  relied  on  by  the  plaintiff  in  error,  to 
reverse  the  proceedings  of  the  Superior  Court.  1.  That  no 
such  demand  of  payment  was  made  of  Babcock,  the  maker, 
as  the  case  required.  2.  That  there  was  no  legal  notice  of 
demand  and  non-payment  served  on  West,  the  indorser. 

First.  This  note  was  deposited  with  a  bank  for  collec- 
tion, and,  according  to  the  usage  of  bankers  in  Cincinnati, 


110  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

Babcock  was  personally  notified  of  the  place  where  and  of 
the  time  when  the  paper  would  become  due.  Although  no 
place  of  payment  was  named  in  the  note,  yet  as  the  maker 
resided  in  Cincinnati,  it  was  not  unreasonable  to  require  pay- 
ment of  it  to  be  made  at  one  of  the  banking  houses  of  the  cit3% 
It  was  the  manifest  duty  of  Babcock  to  have  taken  up  the  note 
at  the  Union  Bank,  in  compliance  with  the  notice  which  he 
received  for  that  purpose.  But  having  failed  to  do  that, 
the  notary  public  called  at  his  place  of  receiving  customers, 
and  formally  demanded  payment.  It  is  said  that  the-  de- 
mand ought  to  have  been  made  at  his  family  residence,  and 
could  not  be  made  elsewhere,  as  he  had  no  well  established 
business  office.  It  seems  that  he  occupied  a  room  at  Hard- 
ing's, where  he  directed  calls  to  be  made  and  where  he 
received  them.  By  his  own  acts  and  declarations  he  au- 
thorized this  place  to  be  known  as  his  office  for  transacting 
business.  He  apprised  the  public  that  he  could  be  found 
there,  that  '  word  left  there  would  find  him.'  He  claimed 
no  other  business  location.  He  gave  no  directions  or  au- 
thority for  calling  on  him,  for  business  purposes,  at  his 
residence.  His  desire  was  to  have  an  office  for  doing  busi- 
ness, where  he  might  conveniehtly  and  with  certainty  be 
found,  and  a  selection  of  such  place  he  accordingly  made 
at  Harding's,  where  he  was  sought  by  the  notary  public, 
but  when  applied  for  happened  to  be  out.  The  object  of 
the  visit,  however,  was  fully  explained  to  those  who  were 
found  in  the  office.  We  are  satisfied  that  reasonable  dili- 
gence in  this  case  was  used  by  the  holder  of  the  note  to 
obtain  payment  from  Babcock,  and  that  the  claim  that  no 
demand  of  payment  was  made  of  him  is  not  well  founded. 

.  .  .  [On  the  second  point  it  was  held  that  the  defendant 
was  duly  notified]. 

The  judgment  of  the  Superior  Court  is 

Affirmed. 


TAYLOR   V.  SNYDER.  Ill 

TAYLOR  V.  SNYDER. 

Supreme  Court  of  New  York,  May,  1846.     3  Denio,  145. 

The  place  of  date  of  a  promissory  note,  payable  generally,  is  only  prima 
facie  the  place  of  payment ;  if  the  maker  is  known  to  reside  elsewhere 
presentment  must  be  made  accordingly,  as  where,  at  the  execution  of  tlie 
note,  he  was  known  by  the  holder  to  reside  in  another  State. 

Assumpsit  against  the  indorser  of  a  promissory  note, 
payable  generally,  but  dated  at  Troy,  New  York,  at  which 
place  presentment  for  payment  was  made,  the  maker  being  a 
resident  of  Florida.  The  plaintiff  was  nonsuited.  Motion 
for  new  trial.     The  facts  appear  in  the  opinion. 

Beardsley,  J.,  for  the  court.  —  As  the  note  bears  date 
at  Troy,  it  is  presumed  to  have  been  made  at  that  place, 
although  the  maker  then  resided  in  Florida,  as  was  well 
known  to  the  original  holder,  Morris,  and  to  Stevenson,  to 
whom  it  was  subsequently  transferred.  The  residence  of 
the  maker  had  not  been  changed  when  the  note  fell  due,  his 
domicile  still  being  in  Florida. 

The  indorser  resided  in  Troy.  It  was  not  shown  that  he 
ever  owned  the  note,  or  was  under  any  other  obligation  for 
its  payment  than  that  of  an  ordinary  indorser ;  and  it  may 
fairly  be  inferred  from  the  case  that  the  note  was  given  for 
a  debt  due  from  the  maker  to  Morris,  and  was  indorsed  for 
his  benefit  at  the  request  of  the  maker. 

Some  months  before  the  note  fell  due,  the  indorser  had 
been  asked  by  the  then  holder,  Morris,  if  it  would  be  paid 
at  maturity,  to  which  he  replied  that  it  would  be ;  that  his 
brother,  the  maker,  would  send  the  money  to  him,  and  he 
should  see  the  note  was  paid.  But  on  being  requested  to 
stipulate,  absolutely,  to  pay  the  note  himself,  he  declined 
to  do  so.  It  does  not  appear  that  on  this  or  any  other  occa- 
sion anything  was  said  as  to  the  place  where  payment  would 
be  made,  or  where  the  note  should  be  presented  for  payment 
at  maturity. 


112  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

Upon  the  evidence  as  stated  in  the  case,  I  think  it  cannot 
be  said  that  anything  has  been  done  by  the  indorser  to 
change  or  affect  his  original  liability  or  his  rights,  in  that 
character.  He  had  not  designated  any  particular  place  in 
Troy,  or  that  city  at  large,  as  the  place  at  which  the  note 
would  be  paid,  or  where  demand  should  be  made,  nor  had 
he  been  requested  to  designate  any  place  for  that  purpose. 
And  although  he  certainly  gave  a  strong  assurance  that  the 
maker  would  remit  the  money  to  him,  and  therefore  that 
the  note  would  be  duly  paid,  he  at  the  same  time  refused  to 
bind  himself  absolutely  for  its  payment.  He  chose  to  leave 
his  own  responsibility  where  his  contract  and  the  law  had 
placed  it;  and  no  one  had  a  right  to  understand  from  what 
he  said  that  he  intended  to  assume  any  new  obligation,  or 
to  dispense  with  the  performance  of  any  act  which  the  law 
required  the  holder  of  the  note  to  perform.  It  does  not 
appear  to  have  been  suggested  on  the  trial  that  the  action 
was  to  be  sustained  on  any  such  ground,  nor  was  the  judge 
requested  to  submit  the  question  of  a  waiver  of  demand  of 
payment,  by  the  indorser,  to  the  jury.  It  was  doubtless 
then  urged,  as  it  was  on  the  argument  at  bar,  that  this  note 
was  by  law  payable  at  Troy,  and  therefore  the  defendant 
had  been  duly  charged  as  indorser,  and  not  that  he  had  in 
any  manner  waived  a  demand  at  the  proper  place. 

What,  then,  is  this  case  ?  A  debtor,  whose  residence  is 
in  Florida,  being  at  Troy,  makes  a  note,  which  he  dates  at 
that  place,  to  his  creditor,  a  resident  of  this  State,  for  an 
amount  due  to  him,  and  procures  a  friend  residing  at  Troy 
to  indorse  the  same.  No  place  of  payment  is  specified  in 
the  note,  nor  is  there  anything  to  indicate  a  place,  unless 
that  follows  from  the  note  bearing  date  at  Troy.  The  holder 
knows  the  residence  of  the  maker  to  be  in  Florida,  but  when 
the  note  falls  due,  instead  of  making  demand  of  the  maker 
personally,  or  at  his  residence  or  place  of  business  in  Florida, 
l)ayment  is  demanded  at  Troy  and  not  elsewhere.  Was  this 
a  sufficient  demand  as  respects  the  indorser  ?  It  clearly 
was,  if  the  note  was  by  law  payable  at  that  place,  and  it 


TAYLOR   V.  SNYDER.  113 

as  clearly  was  not,  if  the  note  was  payable  elsewhere.  This 
is  the  only  question  to  be  determined. 

The  date  of  a  note  at  a  particular  place  does  not  make 
that  the  place  of  payment,  or  at  which  payment  should  be 
demanded  for  the  purpose  of  charging  the  indorser.  This 
was  expressly  adjudged  in  the  case  of  Anderson  v.  Drake, 
14  Johns.  114.  That  was  an  action  against  the  indorser  of 
a  promissory  note,  bearing  date  in  the  city  of  New  York, 
but  not  made  payable  at  any  particular  place.  When  the 
note  was  made,  the  maker  lived  in  Xew  York ;  but  before 
it  fell  due  he  removed  to  Kingston  in  the  county  of  Ulster. 
The  counsel  for  the  plaintiff  insisted  '  that  as  the  note  was 
dated  in  New  York,  and  the-  parties  resided  there  at  the 
time  it  was  made,  it  must  be  presumed,  no  particular  place 
being  designated  for  the  payment,  that  it  was  payable  in 
New  York ;  that  the  removal  of  the  maker  from  New  York 
to  any  other  place  did  not  render  it  necessary  for  the  holder 
to  follow  him  for  the  purpose  of  demanding  payment.'  But 
the  court  thought  otherwise,  and  held  that  a  demand  of  the 
maker  personally,  or  at  his  residence  or  place  of  business 
in  Kingston,  as  in  ordinary  cases,  was  necessary,  and  that 
the  indorser  could  not  be  charged  upon  a  demand  made  in 
the  city  of  New  York,  although  the  note  bore  date  at  that 
place.  This  I  understand  to  be  the  settled  and  invariable 
rule  where  the  maker  has  not  removed  from  the  State,  but 
has  a  known  residence  within  its  limits.  Where,  after  a 
note  has  been  given,  the  maker  absconds,  removes  into 
another  State  or  country,  or  is  without  a  fixed  residence  any- 
where, other  principles,  as  we  shall  see,  apply ;  but  in  no 
case  does  the  date  of  a  note,  of  itself,  make  that  the  place 
where  payment  should  be  demanded  in  order  to  charge  the 
indorser. 

It  has  been  supposed  that  the  case  of  Stewart  v.  Eden,  2 
Caines,  121,  countenances  a  different  doctrine.  Livingston, 
J.,  there  said,  '  The  note  being  dated  in  New  York,  the 
maker  and  indorser  are  presumed  to  have  resided,  and  con- 
templated payment,  there.'    This  remark  was  in  part  strictly 

8 


114  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

correct,  for  the  date  of  the  note  was  presumptive  evidence 
of  residence ;  and  in  a  general  sense  it  may  also  be  true  that 
the  date  raises  a  presumption  that  the  parties  contemplated 
payment  at  that  place.  Judge  Livingston  did  not  say  that 
the  note  was  by  law  payable  at  the  place  of  its  date ;  on  the 
contrary,  the  form  of  expression  conclusively  repels  that 
idea.  He  was  not  speaking  of  what  the  parties  were  bound 
to  do  by  the  terms  of  the  note,  of  their  legal  obligations 
flowing  from  their  engagements  as  maker  and  indorser,  but 
simply  of  what  they  were  presumed  to  have  contemplated. 
If  the  learned  judge  intended  to  affirm  that  a  note,  when 
no  particular  place  of  payment  is  otherwise  indicated,  is  by 
law  payable  at  the  place  where  dated,  he  would  have  said 
so  in  direct  terms,  and  would  not  have  said  it  was  to  be 
presumed  payment  at  that  place  was  contemplated.  This 
would  have  been  absurd.  But  in  truth  the  question  whether 
the  note  in  that  case  was  payable  where  it  bore  date  was 
not  before  the  court,  nor  was  it  there  pretended  that  pay- 
ment had  not  been  duly  demanded.  It  was  an  action  against 
the  representatives  of  a  deceased  indorser;  and  although 
an  objection  was  taken  to  the  form  in  which  the  present- 
ment for  payment  was  alleged  in  the  declaration,  it  was  not 
pretended  by  any  one  that  the  demand  of  payment  had  not 
been  strictly  correct.  The  main  question  in  the  case  was  as 
to  the  sufficiency  of  the  notice  to  the  indorser,  and  the 
remark  of  the  judge  was  made  in  discussing  that  point.  I 
admit  that  upon  the  question  of  due  diligence  in  giving 
notice  to  an  indorser,  it  may  have  been  very  pertinent  and 
proper  to  say  that  the  parties  are  presumed  to  have  con- 
templated payment  at  the  place  where  the  note  was  given 
and  was  dated,  although  such  a  remark  would  be  altogether 
out  of  place  in  deciding  upon  the  construction  of  an  agree- 
ment, and  whether  the  parties,  by  its  terms,  were  bound 
to  make  payment  at  a  particular  place.  There  is  nothing 
therefore  in  this  remark  of  Judge  Livingston  which  can  be 
made  to  countenance  the  idea  that  a  note,  when  no  other 
place  of  payment  is  specified,  is  by  law  payable  at  the  place 


TAYLOR   V.  SNYDER.  115 

of  its  date.     Anderson  v.  Drake,  supra ;  Bank  of  America 
V.  Woodworth,  18  Johns.  315,  322. 

Where  a  promissor}^  note  is  not  made  payable  at  any  par- 
ticular place,  the  general  rule  of  law  is,  that  in  order  to 
charge  the  indorser  payment  must  be  demanded  of  '  the 
maker  personally,  or  at  his  dwelling-house,  or  other  place  of 
abode,  or  at  his  counting-house  or  place  of  business.' 
Story,  Promissory  Notes,  §  235  ;  Bank  of  America  v.  Wood- 
worth,  18  Johns.  315;  s.  c,  in  error,  19  Johns.  391.  But 
although  such  is  the  general  rule,  yet,  under  various  circum- 
stances, a  demand  in  any  form  or  manner  may  be  dispensed 
with.  It  is  a  question  of  diligence,  and  if  a  demand  is 
found  to  be  impracticable,  proper  efforts  for  that  purjDOse 
having  been  made,  the  indorser  will  still  be  held  liable,  due 
notice  having  been  given  to  him  by  the  holder. 

Thus,  where  the  maker  has  absconded,  that  will  ordinarily 
excuse  a  demand,  and  notice  of  the  fact  is  sufl&cient  to  hold 
the  indorser.  1  Ld.  Eaym.  443,  743 ;  3  Kent,  5th  ed.  96 ; 
Putnam  v.  Sullivan,  4  Mass.  45,  53;  Lehman  v.  Jones,  1 
Watts  &  S.  126;  Chitty,  Bills,  10th  Am.  ed.  354,  n.  1; 
Story,  Promissory  Notes,  §  237. 

Where  the  maker  is  a  seaman  on  a  voyage,  having  no 
domicile  in  the  State,  the  indorser  is  liable  without  a  demand 
being  made.  Barrett  v.  Wills,  4  Leigh,  114.  But,  although 
the  maker  may  be  absent  on  a  voyage,  if  he  has  a  domicile 
in  the  State,  payment  must  be  demanded  there.  Dennie  v. 
Walker,  7  N.  H.  199 ;  Whittier  v.  Graffam,  3  Greenl.  82. 

And  in  every  case  where  the  maker  has  no  known  resi- 
dence or  place  at  which  the  note  can  be  presented  for  pay- 
ment, the  holder  will  in  like  manner  be  excused  from 
making  any  demand  whatever.  Story,  Promissory  Notes, 
§  237 ;  Whittier  v.  Graffam,  supra ;  Putnam  v.  Sullivan, 
supra ;  Duncan  v.  McCullough,  4  Serg.  &  Rawle,  480.  But, 
in  all  such  cases,  the  reason  for  not  making  a  demand  must 
be  shown  on  the  trial  of  the  cause.  It  must  appear  that  the 
maker  had  absconded,  was  at  sea,  or  had  no  known  domicile 
or  place  Avhere  the  note  should  be  presented.     The  rule  is 


116  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

strict,  that  a  demand  must  be  made,  or  a  proper  excuse 
shown  for  its  omission. 

There  is  a  further  exception  to  the  rule  requiring  a  de- 
mand to  be  made  of  the  maker,  or  at  his  domicile  or  place 
of  business ;  for  where  a  note  is  made  by  a  resident  of  the 
State,  who,  before  it  is  payable,  removes  from  the  State  and 
takes  up  a  permanent  residence  elsewhere,  the  holder  need 
not  follow  him  to  make  demand,  but  it  is  sufficient  to  pre- 
sent the  note  for  payment  at  the  former  place  of  residence 
of  the  maker.  McGruder  v.  Bank  of  Washington,  9  Wheat. 
598,  post ;  Anderson  v.  Drake,  supra ;  Dennie  v.  Walker, 
supra;  Gillespie  v.  Hannahan,  4  McCord,  503;  Reid  v. 
Morrison,  2  Watts  &  S.  401 ;  3  Kent,  96.  And  this  is  just ; 
for  it  is  but  reasonable  to  suppose  that  neither  party,  when 
the  note  was  given,  looked  for  a  change  of  residence  to  a 
foreign  country,  and  that  each  contracted  upon  the  suppo- 
sition that  no  such  change  would  take  place.  Nevertheless, 
as  was  said  in  Dennie  v.  Walker,  supra,  '  this  is  an  excep- 
tion to  the  general  rule,  and  must  be  construed  strictly.' 
'We  think,'  say  the  court  in  McGruder  v.  Bank  of  Wash- 
ington, supra,  *  that  reason  and  convenience  are  in  favor  of 
sustaining  the  doctrine  that  such  a  removal  is  an  excuse  from 
actual  demand.  Precision  and  certainty  are  often  of  more 
importance  to  the  rules  of  law  than  their  abstract  justice. 
On  this  point,  there  is  no  other  rule  that  can  be  laid  down 
which  will  not  leave  too  much  latitude  as  to  place  and  dis- 
tance. Besides  which,  it  is  consistent  with  analogy  to  other 
cases  that  the  indorser  should  stand  committed,  in  this 
respect,  by  the  conduct  of  the  maker.  For  his  absconding 
or  removal  out  of  tlie  kingdom,  the  indorser  is  held,  in  Eng- 
land, to  stand  committed.' 

These  exceptions  to  the  general  rule,  it  will  be  seen,  all 
rest  on  peculiar  reasons.  In  one,  the  maker  has  absconded ; 
in  another,  he  is  temporarily  absent,  and  has  no  domicile  or 
place  of  business  within  the  State  ;  in  a  third,  his  residence, 
if  any  he  has,  cannot  be  ascertained ;  while  in  the  fourth, 
he  has  removed  out  of  the  State  and  taken  up  his  residence 


TAYLOR   I.-.  SNYDER.  117 

in  another  country.  In  each  of  these  instances,  let  it  be 
observed,  the  fact  constituting  the  excuse  occurs  subse- 
quently to  the  making  and  indorsement  of  the  note ;  and  it 
is  this  new  and  changed  condition  of  the  maker,  and  that 
only,  by  which  the  iudorser  stands  committed,  without  a 
regular  demand. 

We  are,  then,  to  inquire  whether  these  exceptions  are  to 
be  multiplied,  and  extended  to  a  case  where  no  change  in 
the  condition  of  either  party  has  taken  place ;  where  the 
maker,  when  the  note  was  made  and  indorsed,  had  a  known 
residence  in  another  State,  and  which  had  remained  un- 
changed at  the  maturity  of  the  note.  It  is  palpable  that 
this  exception,  if  made,  must  be  placed  on  some  new  prin- 
ciple; it  cannot  be  allowed  on  the  ground  which  upholds 
the  others.  The  facts  in  this  case  are  unchanged ;  and,  as 
the  reason  for  making  an  exception  does  not  exist,  the 
exception  itself  should  not  be  allowed.  Unless,  therefore, 
the  general  position  is  true,  that  one  who  indorses  for  a 
maker  Vv^ho  lives  in  another  State  may  be  'held  liable  with- 
out any  demand  being  made  on  the  maker,'  I  think  the 
defendant  was  not  liable  in  the  case  at  bar.  And  if  any 
such  general  rule  of  law  as  I  have  stated  exists,  it  cer- 
tainly may  be  shown ;  but  that  it  has  no  existence  is,  as  I 
believe,  not  only  according  to  the  universal  understanding 
amongst  commercial  men,  but  also  according  to  the  settled 
course  of  business  in  the  commercial  world. 

The  indorsement  of  a  note  is  an  order  to  the  maker  to 
pay  the  amount  to  the  indorsee  or  holder,  as  is  specified 
and  agreed  in  the  note,  and  an  engagement  by  the  iudorser 
that  if  the  note  is  duly  demanded  of  the  maker  and  not  paid, 
or  if  it  shall  be  found  impracticable  to  make  a  demand,  the 
iudorser  will  himself,  on  receiving  due  notice,  pay  the 
amount  to  the  indorsee  or  holder.  Xow,  where  such  an 
order  is  drawn  upon  a  maker  who  resides  in  another  State, 
and  which  is  well  known  to  the  person  in  whose  favor  the 
order  is  drawn,  upon  what  principle  can  it  be  said  that  a 
demand  of  the  maker  is  unnecessary  ?     The  indorsee  volun- 


118  CASES   OX   BILLS,  NOTES,  AND   CHEQUES. 

taiily  cousents  to  take  such  an  order,  and  why  should  he 
not  perform  the  condition  on  which  the  ultimate  liability  of 
the  indorser  depends  ?  I  confess  I  see  no  reason  why  he 
should  not.  Here  is  no  mistake,  or  misapprehension  of 
fact,  at  the  time  the  indorsement  is  made.  The  indorsee 
knows  where  the  maker  resides,  and  that  it  is  in  another 
State.  He  knows  that  by  law,  unless  the  intervention  of  a 
State  line  makes  a  difference,  the  maker  must  be  sought 
where  he  resides,  and  the  demand  must  be  made  there. 
When  the  time  for  payment  arrives,  the  maker  is  still  at  his 
former  residence ;  the  facts  of  the  case  are  precisely  as  they 
were  when  the  order  was  drawn.  Why,  in  such  a  case, 
should  the  State  line  make  a  difference  in  the  construction 
and  legal  effect  of  this  contract  of  the  indorser  ?  It  was 
fairly  entered  into  between  the  parties ;  let  it  then  be  fairly 
observed  and  performed  by  them. 

I  can  well  understand  why  such  an  order  made  by  an  in- 
dorser upon  the  maker  of  a  note  then  residing  ivithin  this 
State,  but  who  removes  into  another  State  before  the  note 
falls  due,  should  receive  a  different  construction,  and  that 
it  would  be  unreasonable  to  require  the  holder  to  follow  the 
maker  to  his  new  residence  in  order  to  demand  payment. 
Here,  a  new  and  unlooked-for  event  has  occurred,  which, 
like  the  absconding  of  a  maker,  or  an  inability  to  discover 
his  residence,  may  very  reasonably  be  held  to  excuse  a 
demand.  In  these  respects,  the  indorser  should  be  held 
to  stand  committed  by  the  act  of  the  maker.  But  where 
the  facts,  in  reference  to  which  the  parties  contracted,  were 
fully  known  to  them,  and  are  in  no  respect  changed,  I  am 
unable  to  discover  any  principle  which  will  excuse  the 
maker  from  making  a  demand,  or  using  proper  diligence 
to  make  a  demand,  as  in  ordinary  cases.  The  interven- 
tion of  a  State  line  has,  in  my  opinion,  no  possible  bearing 
on  the  question. 

I  admit  that  I  have  not  found  any  case  in  which  this 
point  has  been  expressly  adjudicated  as  I  have  stated  it. 
It  seems,  however,  to  have  been  taken  for  granted,  in  the 


TAYLOR   V.  SNYDER.  119 

case  of  IMcGruder  v.  The  Bank  of  AVashington,  already  re- 
ferred to.  The  case  of  Duncan  v.  McCuUough,  Adm'r,  &c., 
4  Serg.  &  Eawle,  480,  was,  in  some  of  its  features,  much 
like  the  one  at  bar.  It  was  an  action  against  the  adminis- 
trator of  an  indorser  of  a  note  made  by  one  Adams,  bearing 
date  at  Baltimore,  in  Maryland,  June  4,  1814,  payable  nine 
months  from  date,  no  place  of  payment  being  specified  in 
the  note.  It  did  not  appear,  otherwise  than  by  its  date, 
where  the  note  was  actually  made ;  and  it  may  be  inferred 
from  the  evidence  that  Adams  was,  at  that  time,  a  resident 
at  Green  Village,  Pennsylvania.  It  did  not  appear  where  he 
was  when  the  note  fell  due,  and  no  demand  of  payment  had 
been  made  anywhere ;  nor  was  it  shown  that  any  search  for 
the  maker  had  been  made.  Here,  then,  was  a  note  dated  at 
Baltimore,  no  place  of  payment  being  stated  in  it,  the  maker 
living  in  another  State.  So  far  it  is  the  case  in  hand ;  yet 
it  was  not  even  suggested,  by  the  counsel  or  the  court,  that 
a  demand  was  unnecesssry,  or  that  Baltimore  was  the  proper 
place  to  make  the  demand.  The  case  was  disposed  of  on 
other  grounds,  and  which  could  not  have  been  in  any  respect 
material,  if  a  demand  at  Baltimore  would  have  been  proper, 
or  if  none  whatever  was  necessary.  On  the  trial,  the  court 
charged  that  the  plaintiff  was  bound  to  prove  a  demand  of 
payment  of  the  maker,  or  due  diligence  used  for  that  pur- 
pose, and  upon  this  part  of  the  case  the  final  opinion  of  the 
court  was  thus  stated  by  Chief  Justice  Tilghman :  '  If  the 
plaintiff  had  proved  that  Adams  had  absconded,  and  was 
not  to  be  found  when  the  note  fell  due,  a  demand  of  pay- 
ment would  have  been  dispensed  with,  because  it  would 
have  been  impossible  to  make  it.  But  no  such  thing  was 
proved,  and  therefore  a  demand  Avas  necessary.  The  note 
being  dated  at  Baltimore,  would  raise  a  presumption  that 
Baltimore  was  the  drawer's  place  of  residence,  as  was  de- 
cided by  the  Supreme  Court  of  Xew  York  in  2  Caines,  127. 
Baltimore,  then,  was  the  place  at  which  inquiry  should  have 
been  made.  The  court  laid  down  the  law  fairly.  A  de- 
mand, or  at  least  due  diligence  in  endeavoring  to  make  a 


120  CASES  ON  BILLS,  NOTES,  xVXD   CHEQUES. 

demand,  was  necessary.'  All  this  seems  to  me  very  just 
and  proper,  A  demand  was  necessary  :  the  note  was  dated 
at  Baltimore,  and  if  the  residence  of  the  maker  was  un- 
known, Baltimore  was  the  place  where  the  inquiry  should 
have  been  made.  But  if,  as  is  now  urged,  Baltimore  was 
the  place  to  demand  payment,  or  if  no  demand  was  re- 
quired, the  argument  of  counsel  in  the  case  referred  to  and 
the  views  of  the  court  were  entirely  wide  of  the  mark. 
And  here  let  me  observe  that,  although  the  date  of  a  note 
does  not  make  it  payable  at  that  place,  still  the  date  may, 
in  one  respect,  be  very  important.  It  raises  a  presumption 
that  the  maker  resides  there,  although  it  is  only  presump- 
tion, 3  Kent,  96,  97;  Lowery  v.  Scott,  24  Wend,  358; 
Galpin  v.  Hard,  3  McCord,  394.  And  where  it  becomes  a 
question  of  due  diligence  in  seeking  to  make  a  demand,  it 
may  be  all  important  to  show  that  inquiry  was  made  at  the 
place  where  the  note  bears  date.  But  here,  this  point  is  of 
no  consequence,  for  the  residence  of  the  maker  was  known 
to  all  parties,  and  not  the  least  effort  was  made  to  make 
demand  of  him  where  he  lived,  or  at  any  other  place  than 
Tro}',  where  the  indorser  resided,  the  maker  then  being  at 
his  home  in  Florida. 

I  am  aware  that  Judge  Story,  in  his  treatise  on  Promis- 
sory Kotes,  after  adverting  to  various  grounds  on  which  a 
demand  of  payment  may  be  excused,  says  :  *  It  seems,  also, 
that  if  the  maker  of  a  promissory  note  resides  and  has  his 
domicile  in  one  State,  and  actually  dates  and  makes  and 
delivers  a  promissory  note  in  another  State,  it  will  be  suffi- 
cient for  the  holder  to  demand  payment  thereof  at  the  place 
where  it  is  dated,  if  the  maker  cannot  personally,  upon  rea- 
sonable inquiries,  be  found  within  the  State,  and  has  no 
known  place  of  business  there.'  §  236.  For  this  he  refers 
to  the  case  of  Hepburn  v.  Toledano,  10  Mart.  (La.)  643. 
It  will  be  observed  that  Judge  Story  does  not  give  to  this 
position  the  authority  of  his  name  and  character  ;  the  point 
is  stated  doubtingly.  It  seems,  he  says,  that  under  such 
circumstances  the  maker  need  not  be  sought  in  the  State 


TAYLOR   V.  SNYDER.  121 

where  he  resides,  and  not  that  it  is  clear  this  will  excuse  the 
usual  demand.  The  learned  author  was  obviously  doing  no 
more  than  to  state  what  seemed  to  him  to  have  been  decided 
in  Louisiana,  and  he  does  it  in  a  manner  which  precludes 
the  idea  that  he  intended  to  adopt  the  principle,  or  give  to 
it  any  authority  beyond  that  of  the  elevated  and  able  tribunal 
by  which  the  case  was  determined.  I  have  looked  at  the 
report  of  the  case  of  Hepburn  v.  Toledano.  It  was  an  ac- 
tion against  the  indorser  of  a  promissory  note  dated  at  Xew 
Orleans,  but  not  made  payable  there.  AVhen  the  note  was 
payable  the  maker  resided  in  Kentucky  ;  but  Avhere  his 
residence  was  when  the  note  was  given  is  not  expressly 
stated.  The  only  question  in  the  case,  as  the  court  said, 
was  whether  the  holder  was  obliged  to  go  out  of  the  State 
to  demand  payment ;  but  whether  that  question  arose  upon 
a  note  given  by  a  resident  of  Louisiana,  who  had  subse- 
quently removed  to  Kentucky,  or  by  a  person  who  lived  in 
Kentucky  when  the  note  was  made,  is  a  fact  upon  which  I 
cannot  satisfy  myself  from  anything  to  be  found  in  the 
report  of  the  case.  We  have  already  seen  that  where  the 
maker  removes  from  one  State  to  another,  after  the  giving 
of  a  note,  the  holder  need  not  follow  him.  This  was  said 
in  Anderson  v.  Drake,  in  14  Johnson,  114,  upon  the  author- 
ity of  which  the  Louisiana  case  was  decided.  In  the  latter 
case,  the  court  say  :  '  There  is  some  difficulty  as  to  the 
place  where  demand  is  to  be  made,  when  the  maker  of  a 
note  or  acceptor  of  a  bill  has  been  a  resident  of  the  State, 
and  before  the  time  of  payment  had  changed  his  domicile ; 
but  if  he  lives  in  another  country,  the  indorsees  cannot  be 
presumed  to  know  his  residence,  and  all  that  the  law  re- 
quires of  the  holder  is  due  diligence  at  that  place  where 
the  note  is  drawn.  Thus  in  the  case  cited  by  the  appel- 
lant, 14  Johns.  116,  it  is  stated  by  the  court  to  have  been 
previously  decided  that,  where  a  note  was  dated  at  Albany, 
and  the  drawer  of  it  afterwards  removed  to  Canada,  the 
demand  where  it  was  drawn  was  sufficient  to  charge  the 
indorser.'     And  it  was  held  that  the  demand  at  New  Or- 


122  CASES   ON   BILLS,  NOTES,  AND  CHEQUES. 

leans  was  sufficient.  I  must  say  that  my  impression  upon 
this  case  is  that  the  maker  of  the  note  had  removed  from 
Louisiana  after  the  giving  of  the  note ;  but,  if  the  fact  were 
otherwise,  I  think  the  decision  should  not  be  followed. 
The  case  is  not  strictly  authority,  although  harmony  in  the 
decisions  of  the  several  State  courts,  upon  such  a  point,  is 
exceedingly  desirable.  But  I  cannot  assent  to  the  principle 
that  where  no  change  has  taken  place  in  the  residence  of 
the  maker,  between  the  making  of  the  note  and  the  time  of 
its  payment,  the  intervention  of  a  State  line  dispenses  with 
the  necessity  of  making  due  demand  of  payment,  or  at  all 
affects  the  question.  I  therefore  think  the  nonsuit  was 
right,  and  a  new  trial  should  be  denied. 

New  trial  denied. 


MONTELIUS  V.   CHARLES. 

Supreme  Court  of  Illinois,  January,  1875.     76  111.  303. 

That  <i  sight  bill  of  exchange  is  presented  to  the  drawee  within  reason- 
able time  after  delivery,  is  all  the  drawer  can  require. 

Appeal  from  a  judgment  in  favor  of  the  plaintiffs.  The 
case  is  stated  in  the  opinion. 

Scott,  J.,  for  the  court. — This  action  was  upon  an 
inland  bill  of  exchange,  in  the  name  of  a  remote  assignee, 
against  the  drawers.  One  important  question  is,  whether 
the  holders  had  been  guilty  of  such  laches,  before  present- 
ing it  to  the  drawee  for  payment,  as  would  bar  a  recovery 
against  the  drawers. 

Defendants  were  engaged  in  the  banking  business  at 
Piper  City  in  this  State.  On  the  8th  of  September,  1873, 
on  the  application  of  James  McBride,  they  drew  their 
draft  on  the  Franklin  Bank  of  Chicago,  payable  at  sight, 
to  the  order  of  John  Strank,  who  then  resided  at  Canton 
in  Dakota.  It  was,  on  the  same  day,  deposited  in  the 
post-office,  directed  to  the  payer  at  Canton,  who  received 


MONTELIUS   V.  CHARLES.  123 

it  after  some  delay  attributable  alone  to  the  fault  of  the 
mails.  Having  passed  through  the  hands  or  several 
holders,  it  was  presented  on  the  13th  day  of  October, 
1873,  to  the  bank  for  payment,  which  being  refused,  it 
was  protested,  and  notice  given  through  the  post-office  to 
the  drawers  and  the  several  indorsers.  In  the  meantime 
the  Franklin  Bank,  on  which  the  draft  had  been  drawn, 
had  failed  and  gone  into  bankruptcy. 

The  law  is  settled  by  an  unbroken  line  of  decisions  that 
all  drafts,  whether  foreign  or  inland  bills,  must  be  pre- 
sented to  the  drawee  within  a  reasonable  time,  and  in  case 
of  non-payment  notice  must  be  given  promptly  to  the 
drawer  to  charge  him.  But  what  is  a  reasonable  time, 
under  all  the  circumstances,  is  sometimes  a  most  difficult 
question.  The  general  doctrine  is,  each  case  must  depend 
on  its  own  peculiar  facts  and  be  judged  accordingly. 

In  Strong  v.  King,  35  111.  9,  it  was  declared  to  be  a 
general  rule,  that  the  holder  of  a  sight  draft  must  put  it 
in  circulation,  or  present  it  for  payment  at  furthest  on  the 
next  business  day  after  its  reception,  if  within  the  reach 
of  the  person  on  whom  it  is  drawn.  In  the  case  at  bar  the 
draft  was  put  in  circulation,  and  the  point  is  made,  that 
the  mere  fact  it  was  not  presented  for  payment  until  after 
the  lapse  of  thirty-five  days  is  per  se  such  laches  on  the 
part  of  the  holders  as  would  discharge  the  draAvers. 

In  Muilman  v.  D'Eguino,  2  H.  Black.  565,  Eyre,  C.  J., 
said:  'Courts  have  been  very  cautious  in  fixing  any  time 
for  an  inland  bill  payable  at  a  certain  period  after  sight  to 
be  presented  for  acceptance,  and  it  seems  to  me  more 
necessary  to  be  cautious  with  respect  to  foreign  bills  pay- 
able in  that  manner.^     If,  instead  of  drawing  their  foreign 

1  The  bill  in  that  case  was  a  foreign  bill,  drawn  in  five  sets,  March  5, 
1793,  in  London,  on  Calcutta ;  the  sets  were  sent  to  India  in  I\Lay  following 
and  reached  there  October  3  of  that  year.  Four  of  the  sets  were  pro- 
tested for  non-acceptance  on  the  29th  of  the  same  month,  and  the  fifth  on 
the  18th  of  the  next  month.  The  causes  of  delay  are  stated  in  the  report 
of  the  case.  The  jury  found  that  there  had  been  no  laches,  and  the  ver- 
dict was  upheld. 


124  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

bills  payable  at  usances  in  the  old  way,  merchants  choose, 
for  their  own  convenience,  to  draw  them  iu  this  manner 
and  make  the  time  commence  when  the  holder  pleases, 
I  do  not  see  how  the  courts  can  lay  down  any  precise  rule 
on  the  subject.  I  think,  indeed,  the  holder  is  bound  to 
present  the  bill  in  a  reasonable  time,  in  order  that  the 
period  may  commence  from  which  the  payment  is  to  take 
place.  The  question  what  is  a  reasonable  time  must 
depend  on  the  peculiar  circumstances  of  the  case,  and  it 
must  always  be  for  the  jury  to  determine  whether  laches 
is  imputable  to  the  plaintiff.'  Buller,  J.:  'Due  diligence 
is  the  only  thing  to  be  looked  at,  whether  the  bill  be  a 
foreign  or  an  inland  one,  and  whether  it  be  payable  at 
sight,  at  so  many  days  after,  or  in  any  other  manner. 
But  here  T  must  observe  that  I  think  a  rule  may  thus  far 
be  laid  down  with  regard  to  all  bills  payable  at  sight,  or 
at  a  certain  time  after  sight,  namely,  that  they  ought  to 
be  put  into  circulation.  If  they  are  circulated,  the  parties 
are  known  to  the  world  and  their  credit  is  looked  to;  and 
if  a  bill,  drawn  at  three  days'  sight,  were  kept  out  in  that 
way  for  a  year,  I  cannot  say  that  there  would  be  laches. 
But  if,  instead  of  putting  it  in  circulation,  the  holder  were 
to  lock  it  up  for  any  length  of  time,  I  should  say  he  was 
guilty  of  laches.' 

Bills,  both  inland  and  foreign,  having  the  quality  of 
negotiability,  are  intended  in  some  degree  to  be  used  as  a 
part  of  the  circulation  of  the  country,  and  are  indispen- 
sable in  the  conduct  of  extended  commercial  transactions. 
They  afford  a  safe  and  convenient  mode  of  making  pay- 
ments of  indebtedness  between  distant  points.  Banking 
houses  that  for  a  consideration  issue  such  bills  must  be 
understood  to  do  so  in  accordance  with  the  known  custom 
of  the  country,  — that  they  will  be  put  in  circulation  for  a 
limited  period.  If  this  were  not  so,  their  value  would  be 
greatly  depreciated,  and  their  utility  in  commercial  trans- 
actions would  be  destroyed.  Were  it  understood  the 
purchaser  of  such  a  bill  was  bound  to  make  all  possible 


MONTELIUS   V.  CHARLES.  125 

despatch  to  present  it  to  the  drawee  or  lose  his  recourse 
on  the  drawer,  no  prudent  man  would  feel  safe  in  taking 
one.  He  may  know  the  drawer  from  whom  he  purchases 
the  bill  and  be  willing  to  rely  on  his  responsibility;  but  in 
many  cases  he  has  and  can  have  no  knowledge  of  the 
drawer's  correspondent,  the  drawee.  Commercial  usage 
has  therefore  placed  the  responsibility  upon  the  drawer, 
and  he  is  presumed,  in  consideration  of  the  premium  paid, 
to  assume  all  risks  as  to  the  solvency  of  the  drawee  for  such 
reasonable  time  as  the  bill  shall  be  kept  in  circulation. 
There  can  be  no  doubt,  if  the  holder  locks  it  up  and  keeps 
it  out  of  circulation,  he  assumes  all  risks,  and  in  case  the 
bill  is  dishonored  his  laches  in  that  regard  would  bar  a 
recovery  against  the  drawer.  Such  bills  are  not  issued 
with  a  view  to  be  held  as  a  permanent  security,  with  a 
continuing  liability  in  the  drawer.  Illustrative  of  the 
law  of  this  branch  of  the  case  is  Shute  v.  Kobbins,  3  Car. 
&  P.  80. 

The  difficulty  is,  to  determine  for  what  length  of  time 
such  a  bill  may  be  kept  in  circulation  consistently  with  a 
continuing  liability  in  the  drawer.  The  rule  adopted,  as 
we  have  seen,  is,  it  must  be  presented  in  a  reasonable  time 
under  all  the  circumstances.  But  courts  not  infrequently 
experience  great  perplexity  in  making  a  distinction  between 
a  reasonable  time  for  the  presentation  of  such  paper  and 
laches  on  the  part  of  the  holder.  Every  case  differs  so 
essentially  in  its  facts,  it  has  given  rise  to  many  appar- 
ently contradictory  decisions;  but  through  all  of  them  is 
noticeable  the  effort  of  the  courts  to  ascertain  whether  the 
bill  was  kept  in  circulation  for  only  a  reasonable  period  in 
the  regular  course  of  business.  When  that  fact  is  once 
established,  the  liability  of  the  drawer  is  regarded  as  con- 
tinuing. It  will  be  found  the  decisions  differ  only  in  what 
the  various  courts  deemed  reasonable  in  each  particular 
case. 

Id  Robinson  v.  Ames,  20  Johns.  147,  the  bill  declared  on 
was  drawn  on  the  6th  of  March,  but   not  presented  for 


126  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

payment  to  the  drawees  until  the  20th  of  May.  In  the 
meantime  the  drawees  had  failed;  but  in  a  well-reasoned 
opinion  the  court  came  to  the  conclusion  there  was  no 
such  laches  as  would  discharge  the  drawer.  In  Jordan  v. 
Wheeler,  20  Tex.  698,  the  bill  in  suit  was  put  in  circula- 
tion and  indorsed  by  defendants  without  having  been  pre- 
sented for  acceptance  before  it  came  to  the  hands  of  the 
plaintiff.  A  little  more  than  a  month  elapsed  before  he 
presented  it  for  payment,  and  that  was  declared  to  be 
according  to  usage.  In  Nichols  v.  Blackmore,  27  Tex. 
586,  the  court  was  of  opinion  a  delay  of  forty-seven  or 
forty-eight  days  was  not  such  laches  as  would  forfeit  the 
right  of  the  holder  to  recourse  against  the  drawer,  in 
default  of  payment  by  the  drawee. 

Many  other  cases  of  the  same  import  might  be  cited,  but 
these  are  sufficient  for  our  present  purpose.  They  estab- 
lish, beyond  doubt,  the  fact  that  there  is  no  fixed  period 
in  w^hich  the  bill  must  be  presented  for  payment,  but  that 
each  case  must  be  decided  on  its  own  peculiar  facts  in  the 
light  of  commercial  usage. 

In  the  case  at  bar  the  bill  was  immediately  put  in  circu- 
lation. It  was  mailed  to  the  payee  on  the  day  it  bore  date, 
to  his  proper  address  in  Dakota.  Some  delay  occurred, 
attributable  to  interruption  in  the  transmission  of  the  mails, 
but  this  fact  could  not  be  imputed  to  the  payee  as  laches. 
On  the  receipt  the  payee  immediatel}^  undertook  and 
availed  of  the  first  opportunity  to  negotiate  the  bill.  It 
was  kept  in  circulation,  and  no  delay  was  suffered  other 
than  that  incident  to  the  transaction  of  business  in  a 
sparsely  populated  territory  like  Dakota.  The  facts  and 
circumstances  proven  show  no  laches  on  the  part  of  any 
holder  that  would  operate  to  discharge  the  drawers. 

Judgment  affirmed. 


ORIDGE   V.  SHERBORNE.  127 

OKTDGE   V.    SHEEBORKE. 

Court  of  Exchequer,  of  England,  May,  1843.     11  Meeson  &  W.  374. 

A  promissory  note  payable  by  instalments  is  assignable  within  the  Stat. 
3  &  4  Anne,  c.  9  ;  and  the  maker  is  entitled  to  the  days  of  grace  upon  the 
falling  due  of  each  instalment. 

Assumpsit  by  indorsee  against  payee  of  a  promissory 
note,  dated  19th  November,  1838,  payable  to  the  defendant 
by  instalments  on  the  19th  of  November  in  each  succeed- 
ing year,  for  seven  years.  This  action  was  brought  to 
recover  the  amount  of  the  instalment  due  on  the  19th  of 
November,  1842.  There  were  pleas  denying  that  the  note 
was  duly  presented  for  payment,  or  that  the  defendant 
had  due  notice  of  the  presentment  and  dishonor.  At  the 
trial  it  appeared  that  the  note  was  presented  for  payment 
of  the  instalment  in  question  on  the  22d  of  November,  the 
plaintiff  thus  allowing  the  three  days  of  grace  usually  given 
in  the  case  of  negotiable  instruments  ;  it  was  dishonored, 
and  notice  of  the  dishonor  was  given  to  the  defendant  the 
next  day.  It  was  objected  for  the  defendant  that  the  pre- 
sentment and  notice  of  dishonor  were  too  late  ;  that  a 
promissory  note  payable  by  instalments  was  not  a  negoti- 
able instrument  within  the  law  and  custom  of  merchants, 
and  the  maker  thereof  was  not  entitled  to  days  of  grace  at 
all;  or,  if  he  were,  they  could  be  allowed  only  for  pay- 
ment of  the  last  instalment.  The  judge  overruled  the 
objection,  and  the  plaintiff  obtained  a  verdict.  Eule  nisi 
for  a  new  trial. 

Parke,  B.  T  think  the  rule  in  this  case  ought  to  be 
discharged.  The  question  is,  whether,  on  a  promissory 
note  payable  by  instalments,  the  usual  three  days  of  grace 
are  to  be  allowed  or  not.  In  order  to  determine  this 
point,  the  first  question  that  presents  itself  is,  whether 
such  an  instrument  is  a  promissory  note  at  all,  within  the 
Stat.  3  &  4  Anne,  c.  9,  so  as  to  entitle  any  party  into  whose 


128  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

hands  it  may  come  to  sue  upoji  it;  for,  if  so,  there  will  be 
no  difficulty  in  extending  to  it  the  same  rule  as  jirevails 
in  the  case  of  bills  of  exchange;  namely,  that  days  of 
grace  are  to  be  allowed  in  all  cases  where  a  sum  of  money 
is  by  such  a  negotiable  instrument  made  payable  at  a  fixed 
day.  Kow,  in  order  to  render  this  valid  as  a  promissor}'- 
note,  we  must  first  consider  whether  it  might  be  sued,  on 
by  the  original  parties  to  it.  It  is  well  known  that,  before 
the  passing  of  the  Stat.  3  &  4  Anne,  c.  9,  it  was  the  opin- 
ion of  Lord  Holt  that  a  promissory  note  was  only  evidence 
of  a  debt,  and  not  an  instrument  of  obligatory  force  in 
itself.  Then  came  the  statute,  which  puts  promissory 
notes  on  the  footing  of  iuland  bills  of  exchange.  The 
preamble  recites  that  it  had  been  held  'that  notes  in  writ- 
ing, signed  by  the  party  wlio  makes  the  same,  whereby 
such  party  promises  to  pay  unto  any  other  person  or  his 
order  any  sum  of  money  therein  mentioned,  are  not  assign- 
able or  indorsable  over,  within  the  custom  of  merchants, 
to  any  other  person ;  and  that  such  person  to  whom  the 
sum  of  money  mentioned  in  such  note  is  payable  cannot 
maintain  an  action  by  the  custom  of  merchants  against  the 
person  who  first  made  and  signed  the  same;  and  that  any 
person  to  whom  such  note  should  be  assigned,  indorsed, 
or  made  payable  could  not,  within  the  said  custom  of  mer- 
chants, maintain  an  action  against  the  person  who  first 
drew  and  signed  the  same. '  The  statute  is  thus  directed 
to  two  grievances,  —  that  the  note  is  not  assignable,  and 
that  it  is  not  the  subject  of  ,an  action.  Therefore,  '  to  en- 
courage trade  and  commerce,  which  will  be  much  advanced 
if  such  notes  shall  have  the  same  effect  as  inland  bills  of 
exchange,'  the  statute  in  the  first  section  goes  on  to  enact 
that  'all  notes  in  writing,  whereby  any  person,  body  politic 
or  corporate,  shall  promise  to  pay  to  any  other  person  or 
persons,  body  politic  or  corporate,  his,  her,  or  their  order, 
or  unto  bearer,  any  sum  of  money  mentioned  in  such  note, 
shall  be  taken  and  construed  to  be,  by  virtue  thereof,  due 
and  payable  to  any  such  person  or  persons,  etc.,  to  whom 


ORIDGE  V.  SHERBORNE.  129 

the  same  is  made  payable.'  These  Avords  are  general,  and 
without  any  limitation  as  to  the  mode  in  which  the  money 
is  to  be  paid.  The  section  goes  on  to  enact  that  '  every 
such  note  shall  be  made  assignable  or  indorsable  over,  in 
the  same  manner  as  inland  bills  of  exchange  are  or  may 
be,  according  to  the  custom  of  merchants;  and  that  the 
person  or  persons,  etc.,  to  whom  any  such  sum  of  money 
shall  be  by  such  note  made  payable,  may  maintain  an 
action  for  the  same,  in  such  manner  as  they  might  do  upon 
any  inland  bill  of  exchange  made  or  drawn  according  to 
the  custom  of  merchants,  against  the  person  or  persons 
who  signed  the  same  ;  and  that  any  person  or  persons, 
body  politic  or  corporate,  to  whom  such  note  is  indorsed 
or  assigned,  or  the  money  therein  mentioned  ordered  to  be 
paid  by  indorsement  thereon,  may  maintain  their  action 
for  such  sum  of  money  either  against  the  person,  etc., 
who  signed  such  note,  or  against  any  of  the  persons  who 
indorsed  the  same,  in  like  manner  as  in  cases  of  inland 
bills  of  exchange.'  On  the  provisions  of  this  statute, 
therefore,  we  find  no  limitation  imposed  as  to  the  manner 
in  which  the  money  is  to  be  made  payable  ;  and  conse- 
quently, unless  there  is  some  established  rule  or  settled 
practice  to  the  contrary,  a  promissory  note  must  be  deemed 
good  within  the  statute,  whether  it  be  to  pay  an  entire  sum 
at  once,  or  to  pay  it  by  instalments.  No  case  has  been 
cited  to  show  that  a  promissory  note  in  the  latter  form  is 
not  good,  and  we  must  therefore  look  at  the  course  pur- 
sued in  practice  since  the  statute.  Speaking  from  modern 
experience  (and  mine  in  this  respect  has  been  of  some 
standing),  I  have  no  doubt  that  numerous  actions  have 
been  brought  by  the  original  parties  in  whose  favor  such 
notes  have  been  made ;  indeed,  that  this  is  so  every  gen- 
tleman in  the  habit  of  drawing  under  the  bar  can  testify ; 
and  it  is  now  much  too  late  to  say  such  actions  as  those 
are  not  maintainable.  And  if  promissory  notes  are  within 
the  first  clause  of  the  statute,  I  see  no  sufficient  reason 
why  they  should  not  also  be  within  the  second,  and  conse- 

9 


130  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

quently  assignable  to  an  indorsee.  Besides  the  invariable 
practice  on  this  subject,  and  the  fact  that  actions  on  notes 
of  this  kind  have  been  so  numerous,  that  it  is,  I  may  say, 
impossible  that  the  present  objection  should  not  have  been 
taken  in  some  of  them,  if  there  were  really  any  weight  in 
it,  several  reported  cases  have  been  referred  to,  in  which 
such  actions  were  brought,  and  no  objection  taken  that 
they  would  not  lie  on  the  ground  suggested  in  this  case, 
although  other  objections  laere  taken.  One  is  that  of 
Donaldson  v.  Thompson,  6  M.  &  W.  316,  to  which  may  be 
added  those  of  Ashford  v.  Hand,  Andr.  370,  and  Josselyn 
17.  Lacier,  10  Mod.  294.  If  there  had  ever  been  any  idea 
that  a  promissory  note  of  this  nature  was  not  within  the 
statute  of  Anne,  the  objection  would  certainly  have  been 
taken  ;  although  I  rely  more  on  the  established  modern 
usage,  and  think  it  too  late  to  raise  this  objection  now. 
If,  then,  this  is  admitted  to  be  a  promissory  note,  suable 
on  and  indor sable  under  the  statute,  the  next  question 
is  respecting  the  allowance  of  the  usual  days  of  grace 
upon  it.  jSTow,  in  the  case  of  Brown  v.  Harraden,  4  T.  R. 
148,  it  is  said  that,  with  respect  to  the  allowance  of  days 
of  grace,  the  rule  is  exactly  the  same  in  the  case  of  a 
promissory  note  as  of  a  bill  of  exchange;  namely,  that 
they  are  always  to  be  allowed,  when  the  instrument  is  for 
the  payment  of  money  at  a  certain  time,  as  after  a  certain 
number  of  days  or  after  sight,  but  not  when  it  is  only 
payable  on  demand.  That  rule  we  must  adopt  in  this 
case;  and  as  this  note  is  suable  on  and  indorsable  under 
the  statute  of  Anne  in  the  same  manner  as  bills  of  exchange 
were  before,  —  as  both  instruments  are  thereby  simply  put 
upon  the  same  footing,  —  the  days  of  grace  for  both  must 
be  the  same,  and  consequently  ought  to  be  allowed  on  this 
promissory  note. 

Alderson,  B.  I  am  of  the  same  opinion.  Notes  of 
this  nature  are  within  the  literal  words  of  the  statute  of 
Anne ;  and  when  we  are  called  upon  to  decide  whether  they 


OEIDGE    V.  SHERBORNE.  131 

are  virtualhj  within  it,  we  ought  to  look  to  the  invariable 
practice  which  has  existed  in  such  cases.  My  brother 
Parke  has  referred  to  the  modern  practice  on  this  subject, 
in  which  he  has  had  great  experience ;  then  we  have  the 
fact  that  the  intermediate  parties  to  promissory  notes  in 
this  form  have  sued  upon  them,  and  that  there  is  a  number 
of  decided  cases  in  which  the  declarations  would  have  been 
bad  if  this  objection  had  prevailed.  Again,  if  Ave  look  at 
the  Stamp  Act,  we  shall  find  that  the  legislature  itself  has 
taken  a  similar  view  of  this  matter,  and  treated  instruments 
in  this  form  as  negotiable,  by  imposing  a  stamp  duty  upon 
them.  We  thus  have  the  opinion  of  those  persons  who 
have  all  along  been  employed  in  drawing  declarations,  and 
the  opinion  of  the  legislature  itself ;  and,  in  addition  to 
all  these,  we  have  impliedly  the  concurrence  of  Mr.  Baron 
Bayley,  a  great  authority  in  questions  of  this  nature,  who, 
in  his  Avork  on  Bills  of  Exchange,  Avhen  speaking  of  the 
requisites  necessary  to  constitute  a  good  bill,  mentions 
ever}^  other  objection  Avhich  can  be  raised,  but  makes  no 
exception  of  such  as  are  made  payable  by  instalments ; 
which  would  certainly  haA^e  been  a  very  great  omission,  if 
the  present  objection  be  Avell  founded.  The  same  observa- 
tion may  be  made  as  to  other  text-books  which  treat  on  this 
subject.  Taking,  tlien,  all  these  matters  together,  they 
seem  to  establish  that  communis  consensus,  Avhich  Ave  are 
told  facit  jus.  of  all  persons  to  adopt  the  literal  construction 
of  the  statute  of  Anne,  and  which  ought  on  this  account  to 
prevail  Avith  us  in  the  present  case.  If,  then,  a  promissory 
note  payable  by  instalments  be  within  that  statute  at  all, 
it  must  be  so  to  the  A\'hole  extent  of  the  statute ;  so  that 
not  only  may  the  original  parties  to  the  note  sue  upon  it, 
but  so  also  may  all  collateral  parties,  the  instrument  being 
indorsable  like  any  bill  of  exchange,  and  subject  to  the 
incidents  of  such  indorsement.  The  only  question  in  the 
present  case,  therefore,  being  that  relative  to  the  days  of 
grace  on  this  note,  on  Avhich  we  think  the  decision  at  the 
trial  was  correct,  the  present  rule  must  be  discharged. 


132  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

EoLFE,  B.  I  am  of  the  same  opinion.  It  appears  to  me 
that  the  case  which  has  been  referred  to,  of  Donaldson  v. 
Thompson,  is  almost  a  direct  decision  on  this  point,  for  that 
was  an  action  by  the  indorser  of  a  promissory  note,  payable 
by  instalments,  against  the  maker,  to  which  the  defendant 
pleaded  non  assumpsit ;  and  the  question  raised  on  demurrer 
was,  whether  the  declaration,  which  was  somewhat  peculiar 
in  its  form,  was  a  declaration  on  a  promissory  note,  within 
the  meaning  of  the  Keg.  Gen,  H.  4  Wm.  IV.,  Assumpsit,  2, 
which  renders  that  form  of  plea  inadmissible  in  all  actions 
on  bills  of  exchange  and  promissory  notes.  The  defendant 
contended  that  it  was  ;  and  although  the  point  was  argued 
by  very  learned  counsel,  who  made  use  of  numerous  argu- 
ments to  show  that  the  instrument  there  declared  on  was 
not  a  promissory  note,  they  never  suggested  the  objection 
raised  here,  that  it  was  not  a  promissory  note  because  made 
payable  by  instalments ;  and  the  court  held  that  it  did 
amount  to  a  promissory  note  within  the  meaning  of  the 
rule.  It  is  impossible  to  give  effect  to  the  argument  of 
Mr.  Knowles  in  the  present  case,  without  saying  that  the 
decision  of  the  court  in  that  case  was  erroneous. 

Rule  discharged. 

THE   WINDHAM  BANK   v.   NORTOK 
Supreme  Court  of  Connecticut,  July,  1852.     22  Conn.  213. 

Failure  of  presentment  at  maturity  is  excused  by  any  inevitable  or 
unavoidable  accident,  not  attributable  to  the  fault  of  the  holder,  provided 
he  make  presentment  as  soon  thereafter  as  practicable. 

Assumpsit  against  indorsers  of  a  bill  of  exchange,  drawn 
by  George  Hobart,  of  Norwich,  Connecticut,  upon  Mans- 
field, Hall,  &  Stone,  of  Philadelphia,  and  by  them  accepted, 
for  $417.26;  dated  January  31,  1849,  and  payable  four 
months  after  date,  to  the  order  of  the  defendants. 

The  facts  were  found  by  the  court,  by  agreement  of  the 
parties,  as  follows  :  Said  bill  of  exchange  was,  on  the  day 


THE     WINDHAM   BANK   v.  NORTON.  133 

of   its   date,  accepted   by  said   Mansfield,   Hall,  &   Stoue, 
'  payable  at  the  Farmers  and  ^lechanics'  Bank,'  in  the  city 

of  Philadelphia.     On   the day  of  February,  1849,  the 

defendants  procured  said  draft  to  be  discounted  by  the 
plaintiffs,  and  then  indorsed  and  delivered  it  to  them. 
During  the  same  month  of  February,  the  plaintiffs  for- 
warded said  draft,  by  the  United  States  mail,  to  the  Ohio 
Life  and  Trust  Co.,  a  banking  corporation  in  the  city  of 
'New  York,  for  collection,  and  indorsed  the  same  to  their 
cashier,  as  follows :  '  Pay  G.  S.  Coe,  Esq.,  cashier,  or 
order;'  signed,  'Samuel  Bingham,  cashier.'  The  bill,  so 
indorsed,  was,  in  a  clay  or  two  thereafter,  and  in  due  course 
of  mail,  received  by  said  Ohio  Life  and  Trust  Co.  The  third 
day  of  grace,  June  3,  being  Sunday,  the  draft  was  actually 
due  and  payable  on  Saturday,  June  2.  During  the  year 
1849,  there  were  two  mails  per  day,  each  way,  between 
New  York  and  Philadelphia,  those  for  the  latter  place 
leaving  Xew  York,  one  at  nine  a.  m.,  the  other  at  four  and  a 
half  p.  M.,  and  both  due  at  Philadelphia  in  five  hours  from 
their  departure.  The  Farmers  and  Mechanics'  Bank  were 
the  Philadelphia  correspondents  of  the  Ohio  Life  and  Trust 
Co.,  and  communications  by  mail  passed  between  them 
daily.  On  the  morning  of  June  1,  the  cashier  of  the  Ohio 
Life  and  Trust  Co.  enclosed  this  draft  with  others,  addressed 
in  the  proper  and  usual  mode,  to  the  Farmers  and  Mechanics' 
Bank,  and  deposited  said  letter  in  the  United  States  post- 
office,  at  the  city  of  New  York,  in  season  for  the  afternoon 
mail  of  that  day  for  Philadelphia.  That  letter  was  duly 
deposited  in  said  mail,  and  said  mail  left  New  York,  and 
arrived  at  Philadelphia  in  due  and  usual  time  ;  but  the 
mail-bags  containing  the  letters  for  Philadelphia  were,  by 
the  post-office  clerks  in  the  office  at  New  York,  marked 
to  be  forwarded  to  Washington,  and  were,  therefore,  not 
delivered  at  Philadelphia,  but  carried  to  "Washington.  At 
Washington  the  mistake  was  discovered,  and  said  mail- 
bags  forwarded  to  Philadelphia,  which  place  they  reached 
in  the  course  of  Sundav,  June  3.     On  the  morning  of  the 


134  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

next  day  said  lettei-,  with  tlie  draft  enclosed,  was  deliv^ered 
from  tlie  post-office  at  Philadelphia  to  said  Farmers  and 
Mechanics'  Bank,  who,  by  their  cashier,  refused  payment 
of  the  same,  and  between  the  hours  of  nine  and  ten  a.  m. 
of  the  day  placed  said  draft  in  the  hands  of  a  notary 
public,  for  protest.  Said  notary,  between  the  hours  of 
nine  a.  m.  and  three  p.  m.  of  said  day,  presented  said  draft 
at  the  counter  of  said  bank  for  payment,  and  received  for 
answer  from  said  cashier  that  he  was  ordered  by  the  accep- 
tors not  to  pay  it,  and  that,  had  he  presented  it  on  Satur- 
day, June  2,  he  should  have  given  him  the  same  answer. 
Said  notary  thereupon,  on  said  fourth  day  of  June,  in  due 
and  proper  form,  protested  said  draft,  and  made  out  written 
notices  to  the  drawer  and  the  several  iudorsers  of  the  non- 
payment of  said  draft,  and  enclosed  said  notices,  with  the 
notice  of  protest,  in  a  letter,  and  on  the  same  day  deposited 
the  same  in  the  post-office  in  said  Philadelphia,  duly  ad- 
dressed to  George  S.  Coe,  cashier  of  Ohio  Life  and  Trust 
Co.,  iSTew  York,  who  had  indorsed  said  draft  to  the  Farmers 
and  Mechanics'  Bank,  and  by  whom  said  letter  was,  in  due 
course  of  mail,  received.  Said  Coe,  on  the  same  day  on 
which  he  received  them,  enclosed  said  letter  of  protest  and 
said  notices,  except  the  one  to  himself,  in  a  letter  duly 
addressed  to  the  plaintiffs,  and  deposited  the  same  in  the 
city  of  New  York  in  season  for  the  next  mail.  The  same 
was,  in  due  course  of  mail,  received  by  the  plaintiffs,  who, 
on  the  day  of  the  receipt  thereof,  inclosed  said  notices  to 
the  defendants,  as  indorsers,  and  said  notice  to  said  drawer 
(his  residence  being  unknown),  in  a  letter  duly  addressed 
to  the  defendants,  and  deposited  it  in  the  post-office  at 
Windham,  in  season  for  the  next  mail,  and  the  same  was, 
in  due  course  of  mail,  received  by  the  defendants.  Mans- 
field, Hall.  &  Stone  became  insolvent,  and  suspended  pay- 
ment on  the  twelfth  day  of  April,  1849,  and  on  the  next 
day  sent  to  the  Farmers  and  Mechanics'  Bank  the  following 
notice  in  writing  :  — 


THE     WIXDlLiM  BANK  v.  NORTON.  135 

*  E.  N.  Lewis,  Esq.,  Cash. 

'  You  will  please  pay  no  more  notes  or  drafts  drawn  by 
us,  and  payable  at  your  bank,  until  further  notice,  as  they 
will  not  be  provided  for. 

'  Very  respectfully  yours, 

']\[axsfield.  Hall,  &  Stoxe.' 

Ko  further  notice  was  sent,  and  said  bank,  from  that  time 
forward,  acted  upon  this  order,  and  refused  payment  of  all 
notes  or  drafts,  payable  at  the  bank,  by  said  firm.  The 
business  hours  of  the  Philadelphia  banks  were,  in  1849, 
from  nine  a.m.  to  three  p.m.  Owing  to  the  miscarriage  of 
the  United  States  mail,  as  above  stated,  said  draft  was  not 
presented  for  payment  on  Saturday,  June  2,  when  it  became 
due,  and  was  never  presented  for  payment  at  any  other  time 
than  on  said  fourth  day  of  June. 

It  has  been  the  usage  of  the  banks  and  merchants  of  this 
country,  for  the  last  forty  years,  to  make  use  of  the  United 
States  mail  in  forwarding  negotiable  notes  and  bills  of  ex- 
change, for  collection  or  acceptance.  It  is  the  custom  of 
the  Windham  Bank,  and  the  four  Norwich  banks,  to  for- 
ward all  paper  in  their  hands,  payable  abroad,  within  five 
or  eight  days  after  it  comes  into  their  hands,  without  refer- 
ence to  the  length  of  time  it  has  to  run. 

The  questions  of  law  arising  upon  these  facts,  and  on  such 
further  facts  as  the  jury  might  rightfully  infer,  were  re- 
served for  the  advice  of  this  court. 

Stores,  J.,  for  the  court.  —  The  defendants  first  insist 
that  the  averments  in  this  declaration,  of  a  due  presentment 
of  the  draft  in  question  and  notice  of  its  non-payment,  must 
be  strictly  proved,  and  that  they  are  not  sustained  by  proof 
of  the  facts  set  up  b}'  the  plaintiffs  by  way  of  excuse.  What- 
ever may  be  the  course  of  authorities  elsewhere,  it  is  well  set- 
tled here  that  those  allegations  are  supported  by  evidence  of 
matter  of  excuse,  or  a  waiver  of  demand  and  notice.     !N'or- 


136  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

ton  V.  Lewis,  2  Conn,  479,  and  Camp  v.  Bates,  11  Conn. 
487,  are  decisive  on  this  point. 

The  other  and  more  important  question  in  this  case  is, 
whether  the  plaintiffs  are  excused  for  the  non-presentment 
of  this  draft  for  payment  on  the  day  when  it  became  due. 
The  last  day  of  grace  being  Sunday,  it  was  payable  on  the 
preceding  Saturday,  which  was  the  second  day  of  June, 
1849.  This  question  depends  on  whether  the  plaintiffs  are 
chargeable  with  negligence  in  not  presentiug  it  on  that  day. 

If  the  agent  of  the  plaintiffs,  to  whom  they  sent  it  to  be 
forwarded  for  presentment  and  collection,  and  who  trans- 
acted this  business  for  them,  was  guilty  of  such  negligence, 
it  is,  of  course,  imputable  to  the  plaintiffs.  And  it  is  not 
important  to  this  question  either  that  the  defendants,  in 
fact,  sustained  no  damage  by  the  draft  not  having  been  pre- 
sented for  payment  when  it  fell  due,  or  that  it  would  not 
have  been  paid  by  the  acceptor,  if  it  had  then  been  pre- 
sented. The  indorser,  on  a  question  of  due  presentment 
for  payment,  is  not  affected  by  either  of  these  circum- 
stances. Nor,  indeed,  do  the  plaintiffs  claim  to  recover  on 
either  of  these  grounds. 

The  question  of  negligence  here  presented  depends  on  the 
inquiry  whether,  under  the  circumstances  of  this  case,  the 
delay  of  the  plaintiffs'  agent  in  not  forwarding  this  draft  to 
Philadelphia  until  the  last  mail  left  New  York  for  that 
place,  on  the  day  next  preceding  that  on  which  the  draft 
fell  due,  constituted  a  want  of  reasonable  or  due  diligence  in 
regard  to  its  presentment.  We  say  under  the  circum- 
stances, because  there  is  no  positive  or  absolute  rule  of  law 
which  determines  within  what  precise  time  the  holder  of  a 
bill  of  exchange  must,  in  all  cases  whatever,  or  at  all 
events,  avail  himself  of  the  authorized  mode  of  transmis- 
sion adopted  in  this  instance,  to  forward  such  paper  for 
presentment.  The  general  principle,  established  by  all  the 
adjudged  cases,  as  well  as  the  approved  elementary  writers, 
is,  that  reasonable  diligence  in  the  presentment  of  a  bill  for 
payment  is  required  of  the  holder,  and  that,  therefore,  if 


THE    WINDHAM   BANK   v.  NORTON.  137 

there  has  been  nc  want  of  such  diligence,  he  is  excused. 
Story,  Bills,  c.  10;  Chitty,  Bills,  c.  9,  10;  Story,  Prom. 
Notes,  c.  7,  §  368 ;  Patience  v.  Townley,  2  Smith,  223,  224. 
In  applying  this  principle,  the  general  rule  is,  that  it 
must  be  presented  for  payment  on  the  very  day  on  which, 
by  law,  it  becomes  due,  and  that,  unless  the  presentment  be 
so  made,  it  is  a  fatal  objection  to  any  right  of  recovery 
against  the  indorser.  But,  although  this  is  the  general 
rule,  it  is  not  a  universal  one,  and  prevails  only  under  the 
qualification,  which  is  really  a  part  of  the  rule  itself,  that 
there  is  no  negligence,  or  want  of  reasonable  diligence,  in 
not  making  such  presentment.  The  whole  rule,  therefore, 
more  properly  stated,  is,  that  the  presentment  must  be  on 
the  day  on  which  the  bill  becomes  due,  unless  it  is  not  in 
the  power  of  the  holder,  by  the  use  of  reasonable  diligence, 
so  to  present  it.  By  the  very  statement  of  this  rule,  as 
thus  fully  expressed,  it  is  plain  that,  on  the  question 
whether  the  holder  is  excused  on  this  ground  for  not  thus 
presenting  it,  or,  in  other  words,  whether  there  was  negli- 
gence oil  his  part,  or  a  want  of  reasonable  diligence,  no 
absolute  or  positive  rule  can,  from  the  nature  of  the  case, 
be  laid  down  which  shall  apply  under  all  circumstances. 
We  have  no  evidence  of  any  general  custom  of  merchants 
in  regard  to  the  precise  time  within  which  mercantile  paper 
is  usually  forwarded,  in  order  to  be  presented  for  payment, 
so  that  the  law  merchant  furnishes  us  no  guide  on  this  point. 
And  it  is  clear  that  the  strict  rule  of  the  common  law,  by 
which  an  inability  to  perform  the  terms  or  condition  of  a 
contract,  by  reason  of  inevitable  accident  or  casualty,  con- 
stitutes generally  no  excuse  for  their  non-performance,  is 
not  applicable  to  mercantile  instruments  of  this  description. 
Therefore,  the  excuse  for  non-presentment  in  this  case  pre- 
sents the  ordinary  question  of  negligence.  That  question 
may,  and  often  does,  depend  on  such  a  variety  of  circum- 
stances, or  those  of  such  a  peculiar  character,  that  it  is  very 
difficult,  if  not  impossible,  to  reduce  them  to  any  fixed  or 
invariable  rule.     But,  in  regard  to  such  a  question,  as  appli- 


138  CASES  ON  BILLS,  NOTES,  AND  CHEQLT:S. 

cable  to  tlie  non-presentinent  of  a  bill  or  note  when  it  is 
due,  it  is  considered  a  well-settled  rule  that  such  want  of 
presentment  is  excused  by  any  inevitable  or  unavoidable 
accident  not  attributable  to  the  fault  of  the  holder,  pro- 
vided there  is  a  presentment  by  him  as  soon  afterward  as 
he  is  able ;  by  which  is  intended  that  class  of  accidents, 
casualties,  or  circumstances  which  renders  it  morally  or 
physically  impossible  to  make  such  presentment.  Judge 
Story,  in  speaking  of  this  ground  of  excuse,  says :  '  It  has 
been  truly  observed  by  a  learned  author,'  referring  to  Mr. 
Chitt}',  '  that  there  is  no  positive  authority  in  our  law 
which  establishes  any  such  inevitable  accident  to  be  a  suffi- 
cient excuse  for  the  want  of  a  due  presentment.  But  it 
seems  justly  and  naturally  to  flow  from  the  general  prin- 
ciple, which  regulates  all  matters  of  presentment  and  notice, 
in  cases  of  negotiable  paper.  The  object,  in  all  such  cases, 
is  to  require  reasonable  diligence  on  the  part  of  the  holder ; 
and  that  diligence  must  be  measured  by  the  general  con- 
venience of  the  commercial  world,  and  the  practicability  of 
accomplishing  the  end  required,  by  ordinary  skill,  caution, 
and  effort.'  And  he  cites  the  remark  of  Lord  Ellen- 
borough,  in  Patience  v.  Townley,  2  Smith,  223,  224.  that  due 
presentment  must  be  interpreted  to  mean,  presented  accord- 
ing to  the  custom  of  merchants,  which  necessarily  implies 
an  exception  in  favor  of  those  unavoidable  accidents  which 
must  prevent  the  party  from  doing  it  within  regular  time. 
Story,  Bills,  §  258. 

Applying  these  principles  to  this  case,  we  are  of  opinion 
that  the  plaintiffs  are  not  chargeable  with  a  want  of  reason- 
able diligence. 

No  fault  or  impropriety  is  imputable  to  them,  by  reason 
of  their  having  selected  the  public  mail  as  the  mode  of 
forwarding  the  draft  in  question,  to  the  bank  in  Philadel- 
phia, where  it  was  payable.  It  is  properly  concfeded  by  the 
defendants  tliat  such  mode  of  transmission  was  in  accord- 
ance with  the  general  commercial  usage  and  law,  in  the  case 
of  paper  of  this  description.     Indeed,  it  is  recommended  in 


THE     WINDHAM   BANK   v.  NORTON.  139 

the  books  as  the  most  proper  mode  of  transmission,  as  being 
the  least  hazardous,  and  therefore  preferable  to  a  special  or 
private  conveyance.  But,  although  the  public  mail  was  a 
legal  and  proper  mode  by  which  to  forward  this  paper,  it 
was  their  duty  to  use  it  in  such  a  manner  that  they  should 
not  be  chargeable  vv^ith  negligence  or  unreasonable  delay. 
If,  therefore,  they  put  the  draft  into  the  post-office  at  so  late 
a  period  that,  by  the  ordinary  course  of  the  mail,  it  could 
not,  or  there  was  reasonable  ground  to  believe  tliat  it  would 
not,  reach  the  place  of  its  destination  in  season  for  its  pre- 
sentment when  due,  we  have  no  doubt  that  there  would  be, 
on  their  part,  a  want  of  reasonable  diligence,  which  would 
exonerate  the  indorser.  On  the  other  hand,  to  throw  the 
risk  of  every  possible  accident,  in  that  mode  of  forwarding 
the  draft,  upon  the  holder,  where  there  has  been  no  such 
delay,  would  clearly  be  most  inconvenient,  unreasonable,  and 
unjust,  as  well  as  contrary  to  the  expectation  and  under- 
standing of  the  indorser,  who  is  presumed  to  be  aware  of 
the  general  usage  and  law  in  regard  to  the  transmission,  by 
mail,  of  this  kind  of  paper,  and  must  therefore  be  supposed 
to  require  only  reasonable  diligence  in  this  respect  on  the 
part  of  the  holder ;  and  would,  indeed,  be  inconsistent  Avith 
tlie  rule  itself,  which  sanctions  its  transmission  in  that 
manner.  It  has  been  suggested  that  the  principle  should 
be  adopted,  that  when  the  holder  resorts  to  the  public  mail, 
he  should  be  required  to  forward  the  presentment  at  so 
early  a  period,  that  if  by  any  accident  it  should  not  reach 
the  place  of  its  presentment  in  the  regular  course  of  the 
mail  there  should  be  time  to  recall  it,  and  have  it  presented 
when  and  where  it  falls  due ;  or  that,  at  least,  it  should  be 
forwarded  in  season  to  ascertain  Avhether  it  reached  there 
by  that  time,  and  to  make  such  a  demand  or  presentment 
for  payment  as  is  required  in  the  case  of  lost  bills.  We  find 
no  authorily  whatever  for  any  such  rule,  nor  would  it,  in 
our  opinion,  comport  with  the  principle  now  well  estab- 
lished, requiring  only  reasonable  diligence  on  the  part  of 
the  holder,  or  with  the  policy  wliich  prevails  in  regard  to 


140  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

such  commercial  instruments.  It  would,  in  the  lirst  place, 
be  the  means  of  restraining  the  transfer  of  such  paper 
within  such  a  limited  time  as  to  impair,  if  not  to  destroy, 
its  usefulness  and  value,  arising  out  of  its  negotiable  qual- 
ity; and,  in  the  next  place,  it  would  in  many  cases  be 
wholly  impracticable.  The  casualties  incident  to  this  mode 
of  transmission  are  most  various  in  their  character,  and  can- 
not, of  course,  be  foreseen  ;  and  they  might,  in  the  case  of 
forwarding  mercantile  paper,  be  such  as  to  render  it  impos- 
sible to  ascertain  its  miscarriage,  or  to  recall  it  in  season  to 
remedy  the  difficulty.  In  the  case  of  the  draft  now  before 
us,  for  example,  if  it  had  been  placed  by  the  plaintiffs  in 
the  post-office  at  Windham,  where  they  were  located,  and 
transacted  their  business,  for  transmission  direct  from 
thence  to  Philadelphia,  on  the  very  day  when  they  became 
the  holders  of  it,  which  was  between  three  and  four  months 
before  it  became  due,  and,  by  an  accident  or  mistake  of  the 
postmaster  in  the  former  place,  similar  to  that  which 
occurred  in  this  case  at  'New  York,  it  had  been  mailed  to 
one  of  the  most  distant  parts  of  our  country,  or  to  a  foreign 
country  (which  would  not  have  been  more  singular  than 
that  it  should  have  been  mistakenly  mailed,  as  in  the  pres- 
ent case,  for  Washington),  it  might  not  have  been  practi- 
cable for  the  plaintiffs  to  learn  the  accident,  or  obviate  its 
effect,  before  the  paper  fell  due.  In  short,  such  a  rule  as 
that  suggested  would  be  merely  artificial  in  its  character, 
productive  of  great  inconvenience  and  injustice  in  particu- 
lar cases,  without  any  corresponding  general  benefits,  and 
change  the  whole  course  of  business  in  regard  to  a  most 
extensive  and  important  class  of  mercantile  transactions. 
Nor  has  any  other  arbitrary  or  positive  rule  been  suggested 
which  is  not  equally  obnoxious  to  the  same  or  similar 
objections. 

The  only  remaining  inquiry  is,  whether  the  plaintiffs 
are  chargeable  with  negligence  for  not  forwarding  the 
draft  in  question  by  an  earlier  mail  from  New  York  to 
Philadelphia.     It  was  sent  by  the  usual,  legal,  and  proper 


THE     WINDHAM   BANK   v.  NORTON.  141 

mode.  It  was  deposited  in  the  post-office  in  season  to 
reach  the  place  where  it  was  payable,  before  it  fell  due, 
by  the  regular  course  of  the  next  mail;  and  there  was  no 
reason  to  believe  that  it  would  not  be  there  duly  delivered. 
It  was  actually  sent  by  that  mail,  and,  but  for  the  mistake 
of  the  postmaster  where  it  was  mailed  in  misdirecting  the 
package  containing  it,  would  have  reached  its  proper  des- 
tination, and  been  received  there  in  season  for  its  present- 
ment when  due.  It  in  fact  reached  that  place  when  it 
should  have  done,  but  was  carried  beyond  it  in  conse- 
quence of  that  mistake.  As  that  mistake  could  not  be 
foreseen  or  apprehended  by  the  plaintii^s,  it  is  not  reason- 
able to  require  them  to  take  any  steps  to  guard  against  it. 
Indeed,  they  could  not  have  done  so,  as  they  had  no  con- 
trol or  supervision  over  the  postmaster.  They  had  a 
right  to  presume  that  the  latter  had  done  his  duty.  They 
could  not  know  that  he  had  misdirected  the  package  until 
it  was  too  late  to  remedy  the  consequences.  The  occur- 
rence of  the  draft  being  sent  beyond  its  place  of  destina- 
tion was,  therefore,  so  far  as  the  plaintiffs  were  concerned, 
an  unavoidable  accident.  It  happened,  not  in  consequence 
of  any  delay  of  the  plaintiffs  in  putting  the  draft  into 
the  post-office  at  so  late  a  period  that  it  could  not,  or  prob- 
ably would  not,  reach  its  destination  in  due  season,  but 
merely  in  consequence  of  the  act  of  the  official  to  whom 
it  was  properly  confided,  done  after  it  was  properly  in  his 
charge,  by  the  plaintiffs,  for  transmission.  The  accident, 
moreover,  was  of  a  very  peculiar  and  extraordinary  char- 
acter, and  quite  different  from  those  which  are  ordinarily 
incident  to  that  mode  of  transmission,  and  against  which 
it,  would  be  extremely  difficult,  if  not  impossible,  to  guard. 
It  would  have  been  equally  liable  to  occur  at  any  time 
when  the  draft  should  have  been  placed  in  the  post-office. 
It  was  not  owing  in  any  sense  to  the  fault  of  the  plaintiffs, 
but  solely  to  that  of  the  postmaster.  Under  these  cir- 
cumstances, we  do  not  feel  authorized  to  impute  any 
blame  or  negligence  to  the  plaintiffs.     We  are,  therefore. 


142  CASES  ON  BILLS,  NOTES,  AND    CHEQUES. 

of    opinion   that  judgment    should   be   rendered    for    the 
plaintiffs. 

In  this  opinion  the  other  judges  concurred. 

Judgment  for  the  jylctintiffs. 


HALE   V.    BUKR. 
Supreme  Court  of  Massachusetts,  March,  1815.     12  Mass.  86. 

Where  the  maker  of  a  promissory  uote  dies,  aud  an  administrator  is 
appointed  before  the  note  falls  due,  a  demand  uj)on  the  administrator  is 
not  necessary,  in  order  to  charge  the  indorser,  so  that  notice  of  the  death 
and  non-payment  be  duly  given  to  him;  unless  the  maturity  of  the  uote 
happens  more  than  a  year  after  the  appointment  of  the  administrator. 

Assumpsit  by  the  indorsee  against  the  defendant  as 
indorser  of  a  promissory  note,  signed  by  Joseph  Francis, 
payable  to  the  defendant  or  his  order,  in  sixty  days  and 
grace,  dated   August  1st,   1812. 

At  the  trial  of  the  action,  which  was  had  before  the 
present  Chief  Justice,  November  term,  1813,  on  the  gen- 
eral issue,  it  was  in  evidence,  that  Joseph  Francis,  the 
promisor,  died  on  the  4th  of  September,  1812,  and  that 
administration  of  his  estate  was  duly  committed  to  William 
Dodd  on  the  14tli  of  the  same  September,  and  that  he  gave 
legal  notice  of  his  appointment.  The  note  was  lodged  in 
the  Union  Bank,  in  Boston,  for  collection.  At  the  time 
it  fell  due,  the  runner  of  the  bank  left  a  notification  at  the 
counting-room  formerly  occupied  by  the  said  deceased,  and 
where  he  usually  did  business.  Xo  demand  was  made 
upon  the  said  administrator,  who  lived,  and  had  ajilace 
of  business,  in  Boston,  which  was  known  to  the  runner, 
by  whom  notice  was  given  to  the  defendant. 

One  Dench,  the  former  clerk  of  the  deceased,  at  the 
request  of  the  creditors,  took  care  of  the  property  of  the 
deceased,  and  occasionally  went  to  the  counting-room, 
until  the  said  Dodd  was  appointed  administrator.  The 
said   Dodd   then   took   all   the   books  and   papers  of   the 


HALE   V.  BURR.  143 

deceased  to  his  own  store,  and  took  the  sole  charge  of  his 
other  property.  Before  the  note  became  due,  all  the  prop- 
erty of  the  deceased  was  sold  and  delivered;  and  the 
counting-room  was  not  used  for  some  time  before.  The 
estate  of  the  deceased  was  proved  to  be  insolvent. 

A  verdict  was  returned  for  the  defendant  by  direction  of 
the  judge;  and  it  was  agreed,  that,  if  the  court  should  be 
of  opinion  that  a  demand  upon  the  administrator,  under 
the  circumstances  of  this  case,  was  not  necessar}^  to  entitle 
the  plaintiff  to  recover,  the  verdict  should  be  set  aside, 
and  the  defendant  should  be  defaulted;  otherwise,  that 
judgment  should  be  rendered  on  the  verdict. 

Parker,  C.  J.,  for  the  court. — The  question  presented 
in  this  case  is,  whether  an  indorsee  of  a  negotiable  promis- 
sory note  can  maintain  an  action  against  the  indorser,  the 
promisor  having  died,  and  an  administrator  having  been 
appointed  and  duly  qualified  to  act,  before  the  day  of 
payment,  without  proving  a  demand  upon  such  adminis- 
trator at  the  maturity  of  the  note.  Whether  such  demand 
was  actually  made  or  not,  according  to  the  usage  of  the 
bank  where  the  note  was  left  for  collection,  was  a  question 
for  the  jury;  and  by  the  verdict  it  is  established  that  none 
was  made.  But,  as  the  jury  were  instructed  that  such  a 
demand  was  necessary,  if  that  instruction  was  not  right, 
the  verdict  must  be  set  aside. 

And  we  are  all  of  opinion  that  the  instruction  was 
wrong;  and  that  it  is  not  necessary,  to  charge  the  indorser, 
that  a  demand  should  be  made  of  the  administrator.  The 
authorities  cited  by  the  defendant's  counsel  ^  go  merely 
to  prove,  that,  in  order  to  obtain  a  protest  of  a  bill  of 
exchange,  or  to  charge  the  drawer  or  indorser.  if  the  payer 
be  dead,  it  is  incumbent  on  the  holder  to  present  the  bill 
to  his  personal  representative,  if  he  live  within  a  reason- 
able distance.  *■ 

1  Chitty  on  Bills,  Story's  ed.  1 72, 182  :  Molloy,  L.  2,  c.  10,  §  34  ;  Pothier, 
146. 


144  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

From  the  strong  analogy  subsisting  between  bills  of 
exchange  and  promissory  notes,  it  is  possible  that  this 
rule  of  law  may  be  as  applicable  to  the  latter  species  of 
contract  as  to  the  former.  Yet  no  authority  has  been  cited 
to  show  that  the  rule  has  been  applied  to  promissory  notes, 
or  to  any  instrument  other  than  a  foreign  bill  of  exchange, 
where  by  the  law  merchant  a  protest  is  necessary.^ 

In  England,  however,  there  may  be  reasons  for  making 
a  demand  upon  an  executor  or  administrator  of  a  deceased 
promisor  in  a  note  necessary,  which  do  not  exist  in  this 
country ;  and,  if  the  reasons  upon  which  the  law  is  founded 
do  not  exist,  there  is  no  cause  why  we  should  not  decide 
according  to  the  nature  and  spirit  of  the  contract. 

In  this  State  a  demand  upon  an  administrator  would,  in 
most  cases,  be  entirely  nugatory.  He  is  not  obliged  to 
pay  any  debt  of  the  deceased,  except  such  as  are  particu- 
larly privileged,  until  a  year  from  his  appointment.  If 
sued  within  the  year,  he  is  entitled  to  a  continuance,  of 
course.  This  indulgence  is  given  to  enable  him  to  collect 
the  effects  of  the  deceased,  and  to  ascertain  their  suffi- 
ciency to  discliarge  all  the  debts.  If  there  should  be  a 
deficiency,  a  general  distribution  takes  place  among  all 
the  creditors,  without  regard  to  the  character  of  their 
demands,  unless  in  the  few  excepted  cases  above  alluded 
to.  Under  these  circumstances,  should  he  pay  any  debt, 
and  it  should  afterwards  appear  that  the  estate  is  insol- 
vent, he  pays  at  his  peril.  A  prudent  executor  or  admin- 
istrator will,  therefore,  seldom  hazard  the  payment  of  a 
debt  before  he  has  ascertained  the  situation  of  the  estate ; 
and  a  demand  upon  him  would  be  sure  to  meet  with  a 
refusal.  Such  a  demand  would,  therefore,  be  merely  a 
troublesome  formality,  without  any  use  ;  and  notice  to  the 
indorser,  that  (the  promisor  being  dead)  he  will  be  looked 
to  for  payment,  will  in  every  respect  be  as  advantageous 
to  him  as  a  previous  demand  upon  the  promisor. 

^  But  pee  Chitty  on  Bills,  6th  ed.  246-262;  Bayley  on  Bills,  5th  ed.  219; 
Thomson  on  Bills,  444 ;  Price  v.  Young,  1  Nott  &  M'Cord,  438 ;  Roscoe, 
Ev.  158,  2d  ed. ;  2  Phil.  Ev.  22. 


HALE   V.  BURR.  145 

It  is  well  settled,  that,  if  the  promisor  abscond  before 
the  day  of  payment,  or  has  concealed  himself,  the  neces- 
sity of  a  demand  is  taken  away.^  Due  diligence  to  tind 
him  is  all  that  is  required  in  the  latter  case;  and,  in  the 
case  of  absconding,  even  that  is  not  necessary. ^  When 
the  party  is  dead,  and  his  representative  is  not  obliged  to 
pay  his  debts  for  a  year  after  he  assumed  the  trust,  it 
would  seem  as  idle  to  require  a  demand  of  him  as  it  would 
be  to  pursue  one  who  has  absconded.^ 

In  England  there  may  be  more  reason  for  requiring  such 
demand;  for  there  the  representative  is  at  liberty  to  pay 
the  debts,  although  there  should  not  be  enough  to  pay  all, 
if  he  has  regard  to  their  rank  and  degree;  and  he  may 
always  discharge  himself  by  showing  that  he  has  paid 
away  all  that  he  has  received.  He  may,  therefore,  pay  a 
bill  of  exchange,  or  promissory  note,  when  called  upon. 
But  in  this  country  it  is  otherwise;  for,  where  the  estate 
is  insolvent,  as  in  the  present  case,  there  is  no  reason  to 
presume  that  a  demand  would  be  effectual. 

We  do  not  decide,  that,  when  a  note  shall  fall  due  after 
the  expiration  of  the  time  allowed  the  executor  or  admin- 
istrator, by  our  statute,  upon  an  estate  not  represented 
insolvent,  a  demand  upon  him,  or  due  diligence  to  make 
one,  must  not  be  proved.  But  in  the  present  case  we  are 
satisfied  that  no  such  demand  was  necessary.  The  verdict 
must,  therefore,  be  set  aside,  and  the  defendant  be  called.'* 

Defendant  defaulted. 

1  Chitty,  70;  L.  Raym.  743. 

2  Putnam  v.  Sullivan,  4  Mass.  Rep.  45 ;  Widgery  v.  Munroe,  6  Mass> 
Rep.  449  ;  Whittier  v.  Graffam,  3  Greenl.  82. 

3  Thomson  on  Bills,  444. 

*  Burrill  v.  Smith,  7  Pick.  291.  ^ 


10 


146  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

DANA  V.    SAWYER. 

Supreme  Court  of  Maine,  April,  18i3.     22  Maine,  244. 

Presentment  of  a  promissory  note  to  the  maker  at  near  midnight,  after 
he  has  retired  to  rest,  is  not  presumptively  at  a  reasonable  hour. 

This  case  was  submitted  on  the  following  statement  of 
facts:  The  action  is  on  a  promissory  note,  signed  by  T. 
Sawyer  &  Co.,  dated  Dec.  24,  1S38,  for  f  202.50,  on  four 
months,   payable  to  and  indorsed  by  the  defendant. 

It  is  agreed  that  on  the  day  the  note  fell  due,  George 
W.  Smith  came  to  the  house  occupied  by  said  Thorndike 
Sawyer  and  Samuel  H,  Sawyer,  the  defendant,  in  the 
evening,  between  eleven  and  twelve  o'clock,  called  up  said 
T.  Sawyer  from  his  bed,  and  presented  the  note  to  him 
for  payment,  which  he  did  not  pay,  and  left  with  him  a 
notice  and  demand  for  payment,  and  delivered  another 
notice  of  non-payment  by  the  makers  of  the  note,  directed 
to  said  S.  H.  Sawyer,  and  demand  of  payment  to  said  T. 
Sawyer  for  said  Samuel,  which  said  Thorndike  did  not 
deliver  to  said  Samuel.  Said  Samuel  was  then  in  the 
house,  but  was  in  bed.  He  had  his  residence  in  the  same 
house. 

The  court  were  to  enter  a  nonsuit  or  default,  as  they 
might  determine  to  be  the  law  in  the  matter. 


'■o' 


Shepley,  J.,  for  the  court.  — This  case  is  presented  upon 
an  agreed  statement  of  facts,  from  which  it  appears  that 
a  demand  for  payment  was  made  upon  the  maker  of  the 
note,  between  eleven  and  twelve  o'clock  at  night  on  the 
day  that  it  became  payable,  by  calling  him  from  his  bed; 
and  that  he  did  not  pay  it.  There  is  no  further  statement 
of  anything  else  said  or  done,  except  that  a  notice  and 
demand  for  payment  was  left  with  him.  When  a  bill  or 
note  is  payable  at  a  banking-house,  or  other  place,  where 
it  is  well  known  that  business  is  transacted  only  during 


DANA  V.  SAWYER.  147 

certain  hours  of  tlie  day,  the  law  presumes  that  the  parties 
intended  to  conform  to  such  established  course  of  busi- 
ness, and  requires  that  a  demand  should  be  made  during 
those  business  hours.  Parker  v.  Gordon,  7  East,  385. 
The  cases  of  Garnett  v.  Woodcock,  1  Stark.  475,  and  of 
Henry  v.  Lee,  2  Chitty,  124,  may  show  an  exception  to 
this  rule  that,  when  a  person  is  found  at  such  place  after 
business  hours  authorized  to  give  an  answer,  the  demand 
will  be  good  ;  while  it  may  be  difficult  to  reconcile  these 
cases  with  the  case  of  Elford  v.  Teed,  1  jM.  &  S.  28. 
When  the  bill  or  note  is  not  payable  at  a  place  where 
there  are  established  business  hours,  a  presentment  for 
payment  may  be  made  at  any  reasonable  hour  of  the  day. 
Leftley  v.  Mills,  4  T.  E.  174;  Barclay  v.  Bailey,  2  Camp. 
527;  Triggs  v.  Newnham,  10  Moore,  249;  Wilkins  v. 
Jadis,  2  Barn.  &  Adol.  188.  What  hour  may  be  a  reason- 
able one  has  come  under  consideration  in  those  cases.  In 
the  first  of  them  Mr.  Justice  Buller  observes,  that  '  to 
say  that  the  demand  should  be  postponed  till  midnight, 
would  be  to  establish  a  rule  attended  with  mischievous 
consequences.'  In  the  second.  Lord  Ellenboroagh  said, 
'  If  the  presentment  had  been  during  the  hours  of  rest,  it 
"would  have  been  altogether  unavailing.'  In  the  third, 
this  remark,  among  others,  is  quoted  and  approved  by 
C.  J.  Best.  In  the  fourth,  Lord  Tenterden  remarked, 
that  '  a  presentment  at  twelve  o'clock  at  night,  when  a 
person  has  retired  to  rest,  would  be  unreasonable.'  These 
observations,  so  just  and  so  applicable  to  this  case,  author- 
ize the  conclusion  that  the  demand  was  not  made  at  a  rea- 
sonable hour,  unless  the  fact  that  the  maker  was  seen  and 
actually  called  upon  at  that  time  should  make  a  difference. 
Perhaps,  in  analogy  to  the  exception  already  noticed,  it 
might  be  proper  to  admit  of  one  in  this  and  the  like  cases, 
if  it  should  appear  from  the  answer  made  to  the  demand 
that  there  was  a  waiver  of  any  objection  as  to  the  time,  or 
that  payment  would  not  have  been  made  upon  a  demand 
at  a  reasonable  hour.     But  there  is  nothing  in  this  agreed 


us  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

statement   to  show  that   payment   might   not   have   been 

refused  because  the  demand  was  made  at  such  an  hour 

that  the  maker  did  not  choose  to  be  disturbed,  or  because 

he   coukl   not    then   have   access   to   funds   prepared   and 

deposited  elsewhere  for  safety. 

Plaintiff  nonsuit. 

FARXSWOKTH   v.  ALLEN. 

Supreme  Court  of  Massachusetts,  October,  1855.     4  Gray,  453. 

To  charge  an  indorser,  the  holder  must  make  presentment  at  a  reason- 
able hour  of  the  day.  Presentment  as  late  as  nine  o'clock  in  the  evening, 
in  August,  is  reasonable  if  due  endeavor  under  all  the  circumstances  down 
to  that  time  has  been  made  to  make  it,  without  success. 

Action  of  contract  against  the  indorser  of  the  follow- 
ing promissory  note:  '  Boston,  May  23,  1853.  Three 
months  after  date  I  promise  to  pay  to  the  order  of  Walter 
M.  Allen  one  hundred  and  fifty  dollars,  value  received. 
Francis  Freeman.' 

At  the  trial  in  the  court  of  Common  Pleas,  a  witness 
testified  that  he  received  the  note,  at  the  close  of  bank 
hours  on  the  last  day  of  grace,  from  the  Grocers'  Bank  in 
Boston,  who  had  received  the  note  for  collection  from  the 
Cambridge- Market  Bank,  but  did  not  know  the  residence 
of  the  maker  or  indorser;  that  he  inquired  of  a  director  of 
the  Cambridge  jNIarket  Bank,  and  learned  that  the  maker 
lived  at  Winchester  and  the  indorser  at  North  Cambridge ; 
and  the  same  afternoon  carried  the  note  to  a  notary  public 
in  Charlestown,  and  told  him  where  the  parties  resided. 

The  notary  public  testified  that,  as  soon  as  he  could 
after  receiving  the  note  for  protest,  he  went  to  the  house 
of  the  maker  (about  ten  miles  from  Boston),  and  arrived 
there  about  nine  o'clock  in  the  evening:  that  there  was  no 
light  in  the  house,  and  the  inmates  appeared  to  have 
retired  for  the  night  ;  that  he  rung  the  bell,  and  after 
some  time  the  maker  came  to  the  door  with  a  light;  and 
he  presented  the  note,  stated  its  contents,  and  demanded 


FARNSWORTH  v.  ALLEN.  149 

payment,  which  the  maker  refused,  saying  that  he  could 
not,  or  shoukl  not,  or  would  not  pay  it;  that  he  returned 
with  the  note  to  Charlestown,  and  on  the  same  evening 
put  in  the  post-office  a  proper  notice  of  dishonor,  addressed 
to  the  defendant  at  North  Cambridge. 

The  defendant  contended  that  the  demand  proved  was 
not  sufficient  to  charge  the  indorser.  But  Hoar,  J.,  ruled 
otherwise,  the  jury  returned  a  verdict  for  the  plaintiff,  and 
the  defendant  alleged  exceptions. 

BiGELOW,  J.,  for  the  court.  — The  note  declared  on,  not 
being  payable  at  a  bank,  or  at  any  place  where  business 
was  transacted  during  certain  stated  hours  in  each  day, 
was  properly  presented  to  the  maker  at  his  place  of  resi- 
dence. It  was  also  the  duty  of  the  holder  to  present  it 
within  reasonable  hours  on  the  day  of  its  maturity.  No 
fixed  rule  can  be  established,  by  which  to  determine  the 
hour  beyond  which  a  presentment,  in  such  case,  will  be 
unreasonable  and  insufficient  to  charge  an  indorser.  Gener- 
ally, however,  it  should  be  made  at  such  hour  that,  having 
regard  to  the  habits  and  usages  of  the  community  where 
the  maker  resides,  he  may  be  reasonably  expected  to  be  in 
a  condition  to  attend  to  ordinary  business.  In  the  present 
case,  taking  into  consideration  the  distance  of  the  place  of 
residence  of  the  maker  from  Boston,  where  the  note  Avas 
dated,  and  where  it  was  held  when  it  became  due  ;  the 
means  that  were  taken  to  ascertain  the  residence  of  the 
maker,  and  the  season  of  the  year  at  which  the  note  fell 
due,  we  are  of  opinion  that  a  presentment  at  nine  o'clock 
in  the  evening  was  seasonable  and  sufficient.  It  is  quite 
immaterial  that  the  maker  and  his  family  had  retired  for 
the  night.  The  question  whether  a  presentment  is  within 
reasonable  time  cannot  be  made  to  depend  on  the  private 
and  peculiar  habits  of  the  maker  of  a  note,  not  known  to 
the  holder;  but  it  must  be  determined  by  a  consideration 
of  the  circumstances  which,  in  ordinary  cases,  would 
render  it  seasonable  or   otherwise.     Barclay  v.  Bailey,  2 


150  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

Campb.  527  ;  Triggs  v.  Newnham,  10  Moore,  249,  and  1 
Car.  &  P.  631  ;  Wilkius  v.  Jadis,  2  B.  &  Ad.  188  ;  Cayuga 
County  Bank  v.  Hunt,  2  Hill  (X.  Y.),  635. 

Excerptions  overruled. 


OTSEGO   COUNTY   BANK   v.  WAEREN. 

Supreme  Court  of  New  York,  August,  1854.     18  Barb.  290. 

A  notarial  certificate  of  protest  of  a  bill  of  exchange  drawn  upon  W,  C, 
&  Co.,  reciting  tliat  the  bill  was  presented  '  to  one  of  the  firm  of  W,  C,  & 
Co.,  the  acceptors,'  for  payment,  and  dishonored,  is  not  sufficient. 

Action  against  indorsers  of  an  inland  bill  of  exchange 
drawn  upon  'Warren,  Clark,  &  Co.,  363  "Washington  St., 
N.  Y.,'  and  accepted  by  that  firm.  At  maturity  the  bill 
was  presented  to  the  acceptors  for  payment,  and  dishonored. 
It  was  now  protested  by  a  notary  public,  the  certificate  of 
protest  reciting  that  the  notary  presented  the  draft  for 
payment  '  to  one  of  the  firm  of  Warren,  Clark,  &  Co.,  the 
acceptors,  and  demanded  payment,  which  was  refused.' 
The  certificate  was  admitted  in  evidence  of  due  present- 
ment, against  objection;  and  exception  Avas  taken  to  the 
ruling  thereon.  Verdict  for  the  plaintiff.  [This  is  but 
part  of  the  case,  but  the  rest  is  omitted  as  foreign  to  the 
purpose  here  in  view]. 

Bacox,  J.,  for  the  court. — This  cause,  it  appears,  has 
been  twice  tried  at  the  Otsego  Circuit,  presenting  on  the  last 
trial  some  features  which  did  not  exist,  or  were  not  made 
to  appear,  on  the  first.  On  the  first  trial,  which  occurred  in 
September,  1851,  the  rulings  on  the  only  two  points  to  which 
exceptions  were  tnken  were  in  favor  of  the  plaintiffs.  The 
first  was  in  regard  to  the  sufficiency  of  the  certificate  of  the 
notary,  to  prove  a  due  presentment  for  payment  of  the 
draft  on  which  the  suit  is  brought.  The  bill  was  drawn 
on  a  firm  in  the  city  of  New  York,  and  directed  to  them, 
by  the  name  of  Warren,  Clark,  &  Co.,  263  Washington  St., 


OTSEGO   COUNTY  BANK   v.  WARREN.  151 

New  York.  The  certificate  of  the  notary  stated  that  he 
presented  the  draft  for  payment  '  to  one  of  the  firm  of 
Warren,  Clark,  &  Co.,  the  acceptors,  and  demanded  pay- 
ment, which  was  refused.'  The  defendant's  counsel 
objected  to  the  reading  of  the  certificate  in  evidence,  on 
the  ground  that  it  did  not  state  the  name  of  the  person  of 
whom  the  demand  was  made;  but  this  objection  was  over- 
ruled, and  the  certificate  was  read  in  evidence.  The  other 
exception  turned  upon  the  effect  of  a  general  assignment 
made  by  the  drawers  of  tlie  bill  to  Cyremis  Warren,  to 
dispense  with  the  proof  of  due  demand  and  notice  as  to 
him  ;  but  as  this  point  is  not  presented  in  the  case  now 
before  the  court,  it  is  not  necessary  for  the  court  further 
to  consider  it. 

The  Supreme  Court,  at  the  general  term  in  the  sixth  dis- 
trict upon  the  argument  of  the  bill  of  exceptions,  reversed 
the  ruling  at  the  circuit,  holding  that  the  certificate  was 
defective,  inasm^^ch  as  it  did  not  state  who  composed  the 
firm  nor  the  name  of  the  person  of  whom  the  demand  was 
made  ;  and  the  cause  was  sent  back  for  a  new  trial. 

Upon  the  second  trial,  which  took  place  at  the  Otsego 
circuit  in  December,  1853,  the  plaintiffs'  counsel  again 
offered  in  evidence  the  certificate  of  the  notary,  stating  as 
before  that  he  presented  the  draft  to  '  one  of  the  firm  of 
Warren,  Clark,  &  Co.,  and  demanded  of  him  payment 
thereof,  which  was  refused.'  The  defendant's  counsel 
thereupon  interposed  several  objections  to  the  admissibility 
of  the  certificate  in  evidence,  among  which  were  these, 
that  it  did  not  state  the  name  of  the  person  of  whom  the 
demand  was  made,  nor  where  it  was  made.  And  the  cir- 
cuit judge,  in  accordance  with  the  decision  of  the  general 
term,  rejected  the  certificate.  This  point  having  been 
argued  and  deliberately  decided  by  the  full  court  in  the 
sixth  circuit,  mu>st  be  held  to  be  the  law  of  this  case,  and 
I  may  add  that  I  concur  in  the  decision,  although  not 
entirely  or  exclusively  upon  the  grounds  stated  in  the  opin- 
ion.    It  seems  to  me  that  the  certificate  is  further  defective 


152  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

in  not  stating  the  place  where  the  demand  was  made. 
The  draft,  it  will  be  noticed,  is  addressed  to  the  acceptors 
at  a  particular  number  and  street,  in  the  city  of  New  York, 
the  same  being  doubtless  their  place  of  business.  The 
general  rule  is  that  when  the  acceptance  is  by  partners, 
then  the  presentment  for  payment  should  be  at  their  place 
of  business,  or  at  the  dwelling-place  of  either  of  them. 
Bay  ley  on  Bills,  ch.  7,  §  2;  Story  on  Bills  of  Exch.  §  362. 
In  the  case  of  the  Seneca  County  Bank  v.  Neass,  5  Denio, 
329,  the  note  was  payable  at  the  bank,  and  the  notarial 
certificate  stated  that  the  note  was  presented  to  the  cashier 
of  the  bank  ;  and  it  was  held  insufficient,  because  it  did 
not  appear  by  the  certificate  that  it  was  done  at  the 
bank.  In  that  case  the  defect  was  supplied  by  oral  proof; 
and  unless  the  place  of  demand  is  made  to  appear  by  the 
certificatCj  or  by  proof  aliunde,  the  evidence  of  a  due  pre- 
sentment seems  to  me  wholly  defective. 

[The  rest  of  the  opinion  relates  to  questions  of  evidence 
passed  upon  at  the  second  trial,  which  are  foreign  to  the 
purpose  for  which  the  case  is  here  given.] 


MILLS  V.  BANK   OF   THE   UNITED   STATES. 

Supreme  Court  of  the  United  States,  February,  1826.     11  Wheat. 

431. 

Notice  to  an  indorser  is  not  defective  by  reason  of  not  stating  the  name 
of  the  holder ;  nor  is  it  defective  by  reason  of  a  misde-scription  of  the  date 
of  tlie  note  in  question,  provided  there  was  no  other  note  payable  at  the 
same  place  and  made  and  indorsed  by  the  same  parties. 

The  case  is  stated  in  the  opinion  of  the  court. 

Story,  J.,  for  the  court. — This  is  a  suit  originally 
brought  in  the  Circuit  Court  of  Ohio,  by  the  Bank  of  the 
United  States,  against  A.  G.  Wood  and  George  Ebert, 
doing  business  under  the  firm  of  Wood  &  Ebert,  Alexander 


MILLS   D.   BANK  OF  THE   UNITED   STATES.  153 

Adair,  Horace  Reed,  and  the  plaintiff  in  errur,  Peter  Mills, 
The  declaration  was  for  $3,600,  money  lent  and  advanced. 
During  the  pendency  of  the  suit,  Reed  and  Adair  died. 
Mills  filed  a  separate  plea  of  non  assumpsit,  upon  which 
issue  was  joined;  and,  upon  the  trial,  the  jury  returned  a 
verdict  for  the  Bank  of  the  United  States,  for  $4,641, 
upon  which  judgment  was  rendered  in  their  favor.  At 
the  trial,  a  bill  of  exceptions  was  taken  by  Mills,  for  the 
consideration  of  the  matter  of  which  the  present  writ  of 
error  has  been  brought  to  this  court. 

By  the  bill  of  exceptions,  it  appears  that  the  evidence 
offered  by  the  plaintiffs  in  support  of  the  action  '  was,  by 
consent  of  counsel,  permitted  to  go  to  the  jury,  saving  all 
exceptions  to  its  competence  and  admissibility  which  the 
counsel  for  the  defendant  reserved  the  right  to  insist 
[upon]  in  claiming  the  instructions  of  the  court  to  the 
jury  on  the  whole  case.' 

The  plaintiffs  offered  in  evidence  a  promissory  note, 
signed  Wood  &  Ebert,  and  purporting  to  be  indorsed  in 
blank  by  Peter  Mills,  Alexander  Adair,  and  Horace  Reed, 
as  successive  indorsers,  which  note,  with  the  indorsements 
thereon,  is  as  follows,  to  wit:  '  Chilicothe,  20th  July, 
1819.  $3,600.  Sixty  days  after  date,  I  promise  to  pay 
to  Peter  Mills,  or  order,  at  the  office  of  discount  and 
deposit  of  the  Bank  of  the  United  States,  at  Chilicothe, 
$3,600,  for  value  received.  Wood  &  Ebert.'  Indorsed, 
'  Pay  to  A.  Adair,  or  order,  Peter  Mills.'  '  Pay  to 
Horace  Reed,  or  order,  A.  Adair. '  '  Pay  to  the  President, 
Directors,  and  Company  of  the  Bank  of  the  United  States, 
or  order,  Horace  Reed.'  On  the  upper  right-hand  corner 
of  the  note  is  also  indorsed :  '  3185.  Wood  &  Ebert, 
$3,600,  Sept.  18-21.'  It  was  proven  that  this  note  had 
been  sent  to  the  office  at  Chilicothe,  to  renew  a  note  which 
had  been  five  or  six  times  previously  renewed  by  the  same 
parties.  It  was  proven,  by  the  deposition  of  Levin  Belt, 
Esq.,  Mayor  of  the  town  of  Chilicothe,  that,  on  the  22d 
September,  1819,  immediately  after  the  commencement  of 


154  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

the  hours  of  business,  he  duly  presented  the  said  note  at 
the  said  office  of  discount  and  deposit,  and  tliere  demanded 
payment  of  the  said  note ;  but  there  was  no  person  there 
ready  or  willing  to  pay  the  same,  and  the  said  note  was 
not  paid;  in  consequence  of  which  the  said  deponent 
immediately  protested  the  said  note,  for  the  non-payment 
and  dishonor  thereof,  and  immediately  thereafter  prepared 
a  notice  for  each  of  the  indorsers  respectively,  and  immedi- 
ately, on  the  same  day,  deposited  one  of  said  notices  in 
the  post-office,  directed  to  Peter  Mills,  at  Zanesville  (his 
place  of  residence),  of  which  notice  the  following  is  a 
copy:  'Chilicothe,  22d  of  September,  1819.  Sir:  You  will 
hereby  take  notice  that  a  note,  drawn  by  "Wood  &  Ebert, 
dated  twentieth  day  of  September,  1819,  for  $3,600,  pay- 
able to  you,  or  order,  in  sixty  days,  at  the  office  of  discount 
and  deposit  of  the  Bank  of  the  United  States  at  Chilicothe, 
and  on  which  you  are  indorser,  has  been  protested  for  non- 
payment, and  the  holders  thereof  look  to  you.  Yours 
respectfully,  Levin  Belt,  Mayor  of  Chilicothe.'  (Peter 
Mills,  Esq.).  It  was  further  proven  by  the  plaintiffs  that 
it  had  been  the  custom  of  the  banks  in  Chilicothe,  for  a 
long  time  previously  to  the  establishment  of  a  branch  in 
that  place,  to  make  demand  of  promissory  notes  and  bills 
of  exchange,  on  the  day  after  the  last  day  of  grace  (that 
is,  on  the  sixty-fourth  day) ;  that  the  branch  bank,  on  its 
establishment  at  Chilicothe,  adopted  that  custom,  and  that 
such  had  been  the  uniform  usage  in  the  several  banks  in 
that  place  ever  since.  No  evidence  was  given  of  the  hand- 
writing of  either  of  the  indorsers.  The  court  charged  the 
jury:  1.  That  the  notice,  being  sufficient  to  put  the  defend- 
ant upon  inquiry,  was  good,  in  point  of  form,  to  charge 
him,  although  it  did  not  name  the  person  who  was  holder 
of  the  said  note,  nor  state  that  a  demand  had  been  made 
at  the  bank  when  the  note  was  due  ;  2.  That,  if  the  jury 
find  that  there  was  no  other  note  payable  in  the  office  at 
Chilicothe,  drawn  by  Wood  &  Ebert,  and  indorsed  by 
defendant,  except  the  note  in  controversy,  the  mistake  in 


MILLS   V.   BANK  OF   THE   UNITED   STATES.  155 

the  date  of  the  note,  made  by  the  notary  in  the  notice 
given  to  that  defendant,  does  not  impair  the  liability  of  the 
said  defendant,  and  the  plaintiffs  have  a  right  to  recover; 
3.  That,  should  the  jury  find  that  the  usage  of  banks,  and 
of  the  office  of  discount  and  deposit  in  Chilicothe,  was  to 
make  demand  of  payment  and  to  protest,  and  give  notice  on 
the  sixty-fourth  day,  such  demand  and  notice  are  sufficient. 

The  counsel  on  the  part  of  the  defendant  prayed  the  court 
to  instruct  the  jury  *  that,  before  the  common  principles 
of  the  law  relating  to  the  demand  and  notice  necessary  to 
charge  the  indorser  can  be  varied  by  a  usage  and  custom 
of  the  plaintiffs,  the  jury  must  be  satisfied  that  the  defend- 
ant had  personal  knowledge  of  the  usage  or  custom  at  the 
time  he  indorsed  the  note ;  and  also  that,  before  the  plain- 
tiffs can  recover  as  the  holder  and  indorser  of  a  promissory 
note,  they  must  prove  their  title  to  the  proceeds  by  evi- 
dence of  the  indorsements  on  the  note,'  which  instructions 
were  refused  by  the  court. 

Upon  this  posture  of  the  case,  no  questions  arise  for 
determination  here,  except  such  as  grow  out  of  the  charge 
of  the  court,  or  the  instructions  refused  on  the  prayer  of 
the  defendant's  counsel.  Whether  the  evidence  was,  in 
other  respects,  sufficient  to  establish  the  joint  promise 
stated  in  the  declaration,  or  the  joint  consideration  of 
money  lent,  are  matters  not  submitted  to  us  upon  the 
record,  and  were  proper  for  argument  to  the  jury. 

The  first  point  is,  whether  the  notice  sent  to  the  defend- 
ant at  Chilicothe  was  sufficient  to  charge  him  as  indorser. 
The  court  was  of  opinion  that  it  was  sufficient,  if  there 
was  no  other  note  payable  in  the  office  at  Chilicothe,  drawn 
by  Wood  &  Ebert,  and  indorsed  by  the  defendant. 

It  is  contended  that  this  opinion  is  erroneous,  because 
the  notice  was  fatally  defective,  by  reason  of  its  not  stat- 
ing who  was  the  holder;  by  reason  of  its  misdescription  of 
the  date  of  the  note ;  and  by  reason  of  its  not  stating  that 
a  demand  had  been  made  at  the  bank  when  the  note  was 
due.     The  first  objection  proceeds  upon  a  doctrine  which 


156  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

is  not  admitted  to  be  correct,  and  no  authority  is  produced 
to  support  it.  No  form  of  notice  to  an  indorser  has  been 
prescribed  by  law.  Tlie  whole  object  of  it  is  to  inform  the 
party  to  whom  it  is  sent  that  payment  has  been  refused  by 
the  maker;  that  he  is  considered  liable;  and  that  payment 
is  expected  of  him.  It  is  of  no  consequence  to  the  indorser 
who  is  the  holder,  as  he  is  equally  bound  by  the  notice, 
whosoever  he  may  be;  and  it  is  time  enough  for  him  to 
ascertain  the  true  title  of  the  holder  when  he  is  called 
upon  for  payment. 

The  objection  of  misdescription  may  be  disposed  of  in  a 
few  words.  It  cannot  be  for  a  moment  maintained  that 
every  variance,  however  immaterial,  is  fatal  to  the  notice. 
It  must  be  such  a  variance  as  conveys  no  sufficient  know- 
ledge to  the  party  of  the  particular  note  which  has  been 
dishonored.  If  it  does  not  mislead  him,  if  it  conve^'s  to 
him  the  real  fact,  without  any  doubt,  the  variance  cannot 
be  material,  either  to  guard  his  rights  or  avoid  his  respon- 
sibility. In  the  present  case,  the  misdescription  was 
merely  in  the  date.  The  sum,  the  parties,  the  time  and 
place  of  payment,  and  the  indorsement,  were  trul}'  and 
accurately  described.  The  error,  too,  was  apparent  on  the 
face  of  the  notice.  The  party  was  informed  that,  on  the 
22d  September,  a  note  indorsed  by  him,  payable  in  sixty 
days,  was  protested  for  non-payment;  and  yet  the  note 
itself  was  stated  to  be  dated  on  the  20th  of  the  same 
month,  and,  of  course,  only  two  days  before.  Under  these 
circumstances  the  court  laid  down  a  rule  most  favorable 
to  the  defendant.  It  directed  the  jury  to  find  the  notice 
good,  if  there  was  no  other  note  payable  in  the  office  of 
Chili cothe,  drawn  by  Wood  &  Ebert,  and  indorsed  by  the 
defendant.  If  there  was  no  other  note,  how  could  the 
mistake  of  date  possibly  mislead  the  defendant?  If  he 
had  indorsed  but  one  note  for  Wood  &  Ebert,  how  could 
the  notice  fail  to  be  full  and  unexceptionable  in  fact  ? 

The  last  objection  to  the  notice  is,  that  it  does  not  state 
that  payment  was  demanded  at   the  bank  when  the  note 


GILBERT   V.  DENNIS.  157 

became  due.  It  is  certainly  not  necessary  that  the  notice 
should  contain  such  a  formal  allegation.  It  is  sufficient 
that  it  states  the  fact  of  non-payment  of  the  note,  and  that 
the  holder  looks  to  the  indorser  for  indemnity.  Whether 
the  demand  was  duly  and  regularly  made  is  matter  of  evi- 
dence to  be  established  at  the  trial.  If  it  be  not  legally 
made,  no  averment,  however  accurate,  will  help  the  case; 
and  a  statement  of  non-payment  and  notice  is,  by  neces- 
sary implication,  an  assertion  of  right  by  the  holder, 
founded  upon  his  having  complied  with  the  requisitions  of 
law  against  the  indorser.  In  point  of  fact,  in  commercial 
cities,  the  general  if  not  universal  practice  is,  not  to  state 
in  the  notice  the  mode  or  place  of  demand,  but  the  mere 
naked  non-payment. 

Upon  the  point  then,  of  notice,  we  think   there  is   no 
error  in  the  opinion  of  the  Circuit  Court. 


GILBERT   V.    DENNIS. 
Supreme  Court  of  Massachusetts,  March,  1812.     3  Met.  495. 

Mere  notice  of  nonpayment,  which  does  not  express  or  imply  demand 
and  dishonor,  is  not  snch  notice  as  will  render  the  indorser  liable. 

Assumpsit  by  indorsee  against  the  indorser  of  a  negoti- 
able promissory  note.  The  note  was  payable  generally. 
Payment  at  maturity  having  been  refused,  the  holder 
caused  notice  to  be  left  at  the  defendant's  dwelling-house, 
which  stated  that  the  note  '  is  due  this  day  and  unpaid.' 
Defence,  that  the  notice  was  not  good.  The  judge  ruled 
that  it  was  good,  but  reserved  the  question  for  the  whole 
court. 

Shaw,  C.  J.,  for  the  court. —  ....  [A  question  of  the 
presentment.]  No  particular  form  of  notice  is  necessary. 
It  may  be  either  written  or  verbal.  Tindal  v.  Brown,  1 
T.  E.  167.      Nor  will  a  mistake  or  misdescription  of  the 


158  CASES  ON   BILLS,  NOTES,  AND   CHEQUES. 

note  render  the  notice  insufRcient,  if  on  the  whole  it  can- 
not mislead  the  indorser,  and  if  it  so  designates  and  dis- 
tinguishes the  note  as  to  leave  no  reasonable  doubt  in  the 
mind  of  the  indorser  what  note  was  intended,  and  that  it 
was  the  same  with  the  note  in  suit.  Smith  v.  Whiting,  12 
Mass.  6;  Bank  of  United  States  v.  Carneal,  2  Peters,  543. 

But  though  no  special  form  of  notice  is  requisite,  still 
in  some  form  the  fact  to  be  notified  is  that  the  note  is 
dishonored  by  the  default  of  the  promisor;  and  this  may 
be  done  verbally  or  in  writing,  in  any  language  which 
communicates  the  information  to  the  indorser,  in  terms, 
or  by  reasonable  implication.  Indeed,  the  same  formula, 
in  terms,  may  communicate  this  information  or  not,  accord- 
ing to  circumstances.  Suppose  a  note  payable  at  a  bank, 
in  terms,  or  by  the  agreement  of  parties,  or  tacit  agree- 
ment arising  from  usage  or  otherwise ;  it  is  the  duty  of  the 
promisor  to  pay  it  at  such  bank  on  the  last  day  of  grace. 
The  dishonor  of  such  note  by  the  promisor  consists  in  the 
non-payment  at  the  bank.  If  then,  after  the  time  of  pay- 
ment has  elapsed,  notice  be  given  to  the  indorser  that  the 
note  is  unpaid,  it  is  notice  that  it  is  dishonored;  whereas, 
in  case  of  a  private  holder,  in  regard  to  a  note  which 
requires  presentment  and  demand  to  fix  the  holder  with  a 
default,  notice,  in  the  same  words,  that  the  note  is  unpaid 
would  not  necessarily  imply  that  it  was  dishonored,  because 
that  fact  might  be  strictly  true,  though  the  note  had  never 
been  presented,  nor  presentment  waived  or  excused. 

But  whatever  may  be  the  form  of  the  notice,  whether 
written  or  verbal,  we  think  the  result  of  the  decided  cases 
is  this :  that  the  notice  should  be  such  that  it  will  inform 
the  indorser  that  the  notice  has  become  due  and  been  dis- 
honored, and  that  the  holder  relies  on  the  indorser  for 
payment;  that  this  information  may  be  express,  or  may  be 
inferred  by  necessary  implication,  or  reasonable  intend- 
ment from  the  language  ;  construing  such  language  in 
reference  to  its  accustomed  meaning,  when  applied  to  simi- 
lar subjects,  and  with  reference  to  the  terms  of  the  note. 


GILBERT  V.  DENNIS.  159 

the  time  and  place  at  which  the  note  is  to  be  paid  as  fixed 
by  express  or  tacit  agreement,  or  inferred  from  general  or 
particular  usages.  It  is  not  necessary  to  inform  the  in- 
dorser  of  the  time,  place,  or  mode  of  presentment  and 
demand,  nor  the  means  by  which  it  was  dishonored,  nor 
matter  of  excuse  or  waiver.  Whatever  legally  fixes  the 
promisor  with  dishonor  is  sufficient,  on  due  notice  given, 
to  charge  the  indorser.  If,  for  instance,  the  promisor  had 
absconded  before  the  note  is  due,  without  having  made 
provision  for  its  payment,  so  that  no  presentment  and 
demand  can  be  made,  that  is  a  dishonor,  of  which  the 
holder  may,  immediately  after  the  note  has  become  due, 
notify  the  indorser;  or  if  the  promisor  has  agreed  that 
notice  left  at  a  particular  place  shall  be  deemed  a  good 
substitute,  and  notwithstanding  notice  is  so  left  he  does 
not  make  payment,  this  is  likewise  a  dishonor. 

But,  without  considering  further  what  constitutes  a  dis- 
honor, it  may  be  useful  to  examine  more  particularly,  in 
reference  to  the  present  case,  the  authorities  in  relation 
to  the  effect  and  purport  of  the  notice  to  be  given  to  an 
indorser.  The  rule  is  laid  down  in  general  terms  by  the 
text- writers,  that  notice  is  to  be  given  of  the  fact  of  dis- 
honor. Bayley  states  the  duty  of  the  holder.  He  is  under 
an  implied  undertaking  to  every  party  to  the  bill  or  note, 
who  would  be  entitled  to  bring  an  action  on  paying  it,  to 
present,  in  proper  time,  the  one  for  acceptance  and  each 
for  payment;  to  allow  no  extra  time  for  payment,  and  to 
give  notice  without  delay  to  such  person  of  a  failure  in 
the  attempt  to  procure  a  proper  acceptance  or  payment. 
Bayley,  Bills,  1st  Am.  ed,  124. 

In  general,  it  is  incumbent  on  the  holder  to  give  notice 
of  the  dishonor  to  those  persons  to  whom  he  means  to 
resort  for  payment;  otherwise  they  will  be  discharged. 
Chitty,  Bills,  39.3. 

In  Tindal  v.  Brown,  1  T.  E.  167,  and  2  T.  R.  18G,  note, 
it  was  held  that  no  particular  form  of  notice  was  necessary, 
but  that  such  notice  must  come  from  the  holder  of  the  bill 


160  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

or  note,  or  some  party  to  it;  and  that  mere  knowledge  of 
the  fact  of  non-payment,  coming  to  the  indorser  from  any 
other  source,  would  not  be  sufficient.  It  ought  to  purport 
that  the  holder  looks  to  him  for  payment.  The  court  do 
not  say,  in  terms,  that  the  notice  must  directly,  or  by 
implication,  state  the  fact  of  dishonor,  but  it  is  implied. 
The  case  decides  that  the  holder  must  do  an  act,  electing 
to  assert  his  right  to  recover  tlie  note  of  the  indorser, 
which  right  can  only  exist  in  case  of  a  dishonor  of  the 
promisor.  The  case  did  not  call  for  a  decision  as  to  what 
must  be  the  tenor  or  purport  of  the  notice,  as  to  the  fact  of 
dishonor.  It  ought,  said  Mr,  Justice  Buller,  to  purport 
that  the  holder  looks  to  him  (the  indorser)  for  payment. 
In  regard  to  this,  it  may  be  remarked  that,  when  notice  is 
given  by  the  holder  to  the  indorser  of  the  dishonor  of  a 
note,  it  necessarily  implies  that  he  looks  to  him  for  pay- 
ment. That  is  the  natural,  and  may  in  general  be  regarded 
as  the  necessary,  inference  from  the  fact  of  giving  such 
notice. 

This  question  seems  not  to  have  arisen  in  England  until 
a  recent  period  ;  but,  since  the  point  has  been  started, 
there  has  been  a  series  of  decisions  on  the  subject.  The 
first  was  Hartley  v.  Case,  4  Barn.  &  C.  339;  s.  c.  6  Dowl. 
&  Ryl.  505.  The  notice  from  the  holder  was:  '  I  am 
desired  to  apply  to  you  for  the  pa5^ment  of  the  sum  of 
£150,  due  to  myself  on  a  draft  drawn  by  Mr.  Case  on  Mr. 
Case,  which  I  hope  you  will  on  receipt  discharge,  to  pre- 
vent the  necessity  of  law  proceedings,  which  otherwise 
will  immediately  take  place.'  The  court  held  it  insuffi- 
cient, because  it  did  not  apprise  the  party  of  the  fact  of 
dishonor.  They  said,  the  language  used  must  be  such  as 
to  convey  notice  to  the  party  what  the  bill  is,  and  that 
payment  of  it  has  been  refused  by  the  acceptor.  This  was 
in  1825. 

The  next  case  was  that  of  Solarte  v.  Palmer.  On  a  trial 
before  Lord  Tenterden,  he  expressed  an  opinion  that  the 
notice  was  insufficient.     A  bill  of  exceptions  was  taken. 


GILBERT   V.  DENNIS.  161 

and  the  case  brought  before  the  Exchequer  Chamber,  who 
confirmed  the  decision.  7  Bing.  530;  5  Moore  &  P.  475; 
1  Cromp.  &  J.  417;  1  Tyr.  371.  On  appeal  to  the  House 
of  Lords,  the  judgment  was  affirmed.  8  Bligh,  IST.  R.  371, 
874;  s.  c.  2  Ch  &  Fin.  93;  1  Bing.  X.  R.  194;  1  Scott,  1. 

The  action  was  brought  by  the  assignees  of  a  bankrupt, 
and  the  notice  was  given  by  the  attorneys  of  the  assignees. 
It  described  the  bill,  and  stated  that  it  had  been  put  into 
their  hands  by  the  assignees,  with  directions  to  take  legal 
measures  for  the  recovery  thereof,  unless  immediately 
paid. 

In  giving  judgment  in  the  Exchequer  Chamber,  Tindal, 
C.  J.,  states  the  rule  to  be,  that  the  notice  does  not  require 
the  formality  of  a  regular  protest,  but  it  should  at  least 
inform  the  party  to  whom  it  is  addressed,  either  in  express 
terms  or  by  necessary  implication,  that  the  bill  has  been 
dishonored,  and  that  the  holder  looks  to  him  for  payment. 
This  was  decided  in  the  House  of  Lords,  June,  1834. 

The  next  case,  I  believe,  is  that  of  Boulton  v.  Welsh,  3 
Bing.  N.  R.  688;  s.  c.  4  Scott,  425.  The  notice  to  the 
indorser  was  thus:  '  The  promissory  note  for  £200,  drawn 
by,  etc.,  dated  18th  July  last,  payable  three  months  after 
date,  and  indorsed  by  you,  became  due  yesterday,  and  is 
returned  to  me  unpaid.  I  therefore  give  you  notice  thereof, 
and  request  you  will  let  me  have  the  amount  thereof  forth- 
with.' It  was  strongly  urged  that  the  words  returned 
vnjjaid  would  import  to  the  understanding  of  mercantile 
men  that  the  note  had  been  dishonored.  But  the  court 
held  themselves  bound  by  the  case  of  Solarte  v.  Palmer, 
and  believing  this  case  to  be  within  it,  held  the  notice 
insufficient,  although  all  the  judges  expressed  their  regret 
at  the  result.  But  they  state  the  rule  of  law,  as  it  had 
before  been  stated,  that  the  notice  should  show  a  present- 
ment to  the  maker,  a  demand  of  payment,  and  a  refusal. 
As  to  anything  further  than  the  general  rule,  this  case  is 
of  no  authority,  unless  in  a  case  where  the  form  of  notice 
is  precisely  the  same.     Whether  in  such  case  the  words 

11 


162  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

returned  unpaid  would  import  the  fact  of  dishonor  would 
depend  much  upon  the  usage  of  each  mercantile  community 
in  which  they  should  be  used,  and  the  conventional  use 
and  meaning  of  particular  forms  of  expression  used  in  such 
community.  This  was  a  decision  of  the  Court  of  Common 
Pleas,  Easter  Term,  1837.  ^ 

About  the  same  time  was  decided,  in  the  Court  of 
Exchequer,  the  case  of  Hedger  v.  Steavenson,  2  Mees.  & 
W.  799,  where  the  attorney  addressed  a  letter  to  the 
defendant,  informing  him  that  his  note  (describing  it) 
became  due  the  day  before,  and  had  been  returned  unpaid, 
and  requested  him  to  remit  the  amount,  with  Is.  Qd.  not- 
ing; and  the  notice  was  held  to  be  good. 

The  case  of  Messenger  v.  Southey,  1  Man.  &  G.  76,  and 
1  Scott,  K.  R.  180,  was  decided  in  the  Court  of  Common 
Pleas,  in  1840.  The  notice  was  as  follows :  '  This  is  to 
inform  you  that  the  bill  I  took  of  you  for  £15  25.  6fZ.  is 
not  took  up,  and  4s.  6fZ.  expense;  and  the  money  I  must 
pay  immediately.'  Held,  it  was  insufficient,  because  it 
did  not  state  or  intimate,  by  intelligible  inference,  that 
the  note  had  been  dishonored. 

About  the  same  time,  the  case  of  Lewis  v.  Gompertz,  6 
Mees.  &  W.  399,  came  before  the  Court  of  Exchequer. 
The  notice  from  the  holder  to  the  indorser  stated  that  the 
bill  bearing  his  indorsement  had  been  presented  to  the 
acceptor,  and  returned  dishonored,  '  and  now  lies  overdue 
and  unpaid  with  me,  as  above,  of  which  I  give  you  notice.' 
This  was  held  sufficient,  as  giving  all  the  requisite  infor- 
mation, although  it  did  not,  in  terms,  require  payment  of 
the  indorser. 

The  remarks  of  ^Iy.  Baron  Parke,  in  this  case,  are  well 
worthy  of  consideration,  as  showing  the  extent  to  which 
the  court  considered  the  authority  of  Solarte  v.  Paliner  as 
going,  and  the  qualifications  with  which  it  is  to  be  taken. 

In  Grugeon  v.  Smith,  6  Adol.  &  Ellis,  499,  the  notice  to 

1  Boulton  V.  Welsh  was  overruled  in  1842  by  Robson  v.  Curlewis,  2  Q.  B. 
3.  c.  Car.  &  M.  378. 


GILBERT   V.  DENNIS.  163 

the  drawer  of  a  bill  was  that  the  bill  had  been  returned 
with  charges  ;  and  the  immediate  attention  of  the  drawer 
to  it  was  requested.  This  was  held  sufficient,  as  implying 
a  demand  and  refusal,  and  noting  for  non-payment. 

See  Houlditch  v.  Cauty,  4  Bing.  X.  R.  411;  s.  c.  6  Scott, 
209  ;  Strange  v.  Price,  10  Adol.  &  Ellis,  125  ;  Burgh  v. 
Legge,  5  Mees.  &  W.  418;  Shelton  v.  Brothwaite,  7  Mees. 
&  W.  436  ;  Cooke  v.  French,  3  Per.  &  D.  596  ;  s.  c.  10 
Adol.  &  Ellis,   131,  note. 

These  are  all  recent  cases,  bearing  more  or  less  directly 
upon  the  question,  but  do  not  essentially  vary  the  result. 
Where,  in  the  notice,  it  is  stated  that  the  bill  has  been 
noted  or  returned  with  charges  of  protest,  or  the  like,  it  is 
held  to  be  notice,  by  reasonable  implication  of  the  fact  of 
dishonor. 

It  was  contended  at  the  argument  that  although  it  has 
been  settled  by  recent  authorities  in  England  that  the 
notice  to  the  indorser  must  state  the  fact  of  dishonor,  yet 
that  the  American  authorities  would  show  that  it  was  un- 
necessary. It  becomes,  therefore,  necessary  to  examine 
and  compare  them. 

Mills,  in  error,  v.  TJ.  S.  Bank,  431  Wheat.^  The  note 
was  in  terms  payable  at  the  branch  of  the  U.  S.  Bank 
at  Chilicothe,  and  indorsed  by  the  original  defendant, 
plaintiff  in  error.  It  was  demanded  at  the  proper  time  at 
the  bank,  but  there  being  no  person  there  ready  and  will- 
ing to  pay  the  same,  it  was  immediately  protested,  and 
notice  given  to  the  defendants.  The  notice  described  the 
note  by  the  date  and  amount,  the  time  and  place  of  pay- 
ment, and  as  a  note  on  which  the  defendant  was  indorser, 
and  stated  thus :  '  which  has  been  protested  for  non-pay- 
ment, and  the  holders  thereof  look  to  you.'  (Signed  by 
the  Mayor  of  Chilicothe  acting  as  notary,  and  addressed 
to  the  defendant.)  It  was  objected  that  the  notice  was 
defective,  because  it  did  not  state  who  was  the  holder; 
because  there  was  a  misdescription  of  the  date;  and  because 

1  Ante.  p.  152. 


164  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

it  did  not  state  tliat  a  demand  had  been  made  at  the  bank, 
when  the  note  was  due.  As  to  the  misdescription,  it  was 
held  to  be  of  no  importance,  if  there  was  no  other  note  to 
whicli  it  could  apply,  if  it  was  so  described  as  to  indicate 
the  note  in  suit,  and  if  it  did  not  mislead. 

As  to  the  sufficiency  of  the  notice,  the  opinion  was 
delivered  by  Mr.  Justice  Story.  Some  particular  expres- 
sions, taken  alone,  would  seem  to  warrant  the  position  for 
which  it  is  cited.  But  taking  the  whole  together,  and  in 
reference  to  the  case  then  before  the  court,  we  think  it  is 
not  opposed  to  the  rule  as  stated  in  the  English  cases. 
Speaking  in  reference  to  the  first  objection,  that  the  notice 
did  not  state  who  was  the  holder,  the  judge  says :  '  Xo 
form  of  notice  to  an  indorser  has  been  prescribed  by  law. 
The  whole  object  of  it  is  to  inform  the  party  to  whom  it  is 
sent  that  payment  has  been  refused  by  the  maker ;  that  he 
is  considered  liable;  and  that  payment  is  expected  of  him.' 

In  reference  to  the  objection  that  it  did  not  state  that 
payment  was  demanded  at  the  bank  when  the  note  became 
due,  he  says :  '  It  is  certainly  not  necessary  that  the  notice 
should  contain  such  a  formal  allegation.  It  is  sufficient 
that  it  states  the  fact  of  non-payment  of  the  note,  and  that 
the  holder  looks  to  the  indorser  for  indemnity.'  He  then 
speaks  of  the  fact  of  presentment  and  demand  as  matter  of 
fact  to  be  proved,  and  adds :  '  A  statement  of  non-payment 
and  notice  is,  by  necessary  implication,  an  assertion  of 
right  by  the  holder,  founded  on  his  having  complied  with 
the  requisitions  of  law  against  the  indorser.'  One  of 
these  requisitions  is,  of  course,  presentment  and  demand. 
And  the  learned  judge  concludes,  upon  this  point,  by  add- 
ing that,  'in  point  of  fact,  the  general  if  not  universal  prac- 
tice is,  not  to  state  in  the  notice  the  mode  or  place  of 
demand,  but  the  mere  naked  non-payment.' 

In  the  case  then  before  the  court,  the  notice  contained  a 
full  and  precise  statement  of  the  presentment,  demand, 
and  non-payment  by  the  maker.  The  objection  with  which 
the  court  were  dealing  was,  that  the  notice  did  not  specify 


GILBERT  V.  DEXXIS.  165 

the  time  and  place  of  demand.  The  answer  made  was, 
that  such  particularity  was  unnecessary,  and  that  it  is 
sufficient  that  it  states  the  fact  of  non-payment.  Applied 
to  the  facts  of  that  case,  it  may  be  construed  to  mean  non- 
payment after  due  presentment.  So,  when  the  learned 
judge  speaks  of  the  practice  of  commercial  cities,  he  speaks 
of  notice  of  the  mere  naked  non-payment,  in  contradistinc- 
tion to  stating,  in  the  notice,  the  mode  and  place  of  demand. 
That  such  is  the  meaning  may  be  inferred  from  the  pas- 
sage before  cited,  in  which  he  speaks  of  the  object  of  the 
notice,  which  is  to  inform  the  indorser  that  payment  has 
been  refused  by  the  maker.  Refusal  implies  non-payment 
on  demand,  or  under  such  circumstances  as  render  a  pre- 
sentment and  demand  unnecessary.  Indeed,  in  many 
cases,  simple  notice  of  non-payment  is  notice  of  dishonor ; 
as  where  the  note  is  in  terms,  or  by  usage  or  special  agree- 
ment, payable  at  a  bank,  a  notice  stating  the  date  and 
terms  of  the  note,  showing  that  it  has  become  due,  and 
averring  that  it  is  unpaid,  is  equivalent  to  an  averment 
that  it  is  dishonored. 

In  Smith  v.  Whiting,  12  Mass.  6,  no  question  was  raised 
as  to  the  sufficiency  of  the  notice.  It  was  notice  from  a 
bank.  It  described  the  note  as  due  and  unpaid;  and  by 
usage  it  was  held  to  be  payable  at  the  bank.  Of  course  it 
was  dishonored,  by  not  being  paid  at  the  bank  by  the 
maker. 

So  in  State  Bank  v.  Hurd,  12  Mass.  172,  notice  was  left 
at  a  place  agreed  by  the  parties  as  a  substitute  for  notice 
at  the  house  or  place  of  business  of  the  maker;  and  it  was 
held  sufficient,  being  equivalent  to  a  more  formal  demand; 
and  failure  of  the  promisor  to  pay,  on  such  notice,  ren- 
dered the  indorser  liable. 

The  case  of  Bank  of  Rochester  v.  Gould,  9  Wend.  279, 
is  a  case  of  ynere  misdescription.  The  notice  to  the  in- 
dorser stated  expressly  that  the  note  had  been  protested 
for  non-payment ;  and  the  only  question  was,  whether  it 
was  well  described.  It  therefore  does  not  affect  the  present 
question. 


166  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

The  case  of  Bank  of  United  States  v.  Carneal,  2  Peters, 
543,  may  be  considered  as  throwing  some  light  on  the  sub- 
ject of  inquiry.  It  is  held  that  when  the  note  is  payable 
at  a  bank,  and  the  bank  is  itself  the  holder  of  it,  no  demand 
is  necessary.  It  is  the  duty  of  the  maker  to  go  to  the  bank 
within  the  usual  hours  of  business  and  pay  it;  and,  if  he 
fail  to  do  so,  the  note  is  dishonored.  Toward  the  close  of 
the  opinion,  given  by  Mr.  Justice  Story,  it  is  stated  thus : 
'  A  suggestion  has  been  made  at  the  bar  that  a  letter  to  the 
indorser,  stating  the  demand  and  dishonor  of  the  note,  is 
not  sufficient,  unless  the  party  sending  it  also  informs  the 
indorser  that  he  is  looked  to  for  payment.  But  where, 
such  notice  is  sent  by  the  holder,  or  by  his  order,  it  neces- 
sarily implies  such  responsibility  over.  The  purpose  may 
be  reasonably  inferred  from  the  nature  of  the  notice.' 

We  have  thus  attempted,  at  the  risk  of  being  somewhat 
tedious,  to  ascertain  what  the  rule  is  upon  this  subject,  on 
account  of  the  extreme  importance  of  certainty  and  uni- 
formity in  the  rules  of  law  applicable  to  the  rights  and 
duties  of  holders  and  other  parties  to  notes  and  bills  of 
exchange.  And  we  take  that  rule  to  be,  that  as  an  indorser 
is  liable  only  conditionally  for  the  payment,  in  case  of  a 
dishonor  of  the  note  at  its  maturity  by  the  maker  and 
notice  thereof  to  the  indorser,  in  order  to  charge  him, 
notice  of  such  dishonor  must  be  given  him  by  the  holder 
or  his  agent,  or  some  party  to  the  bill ;  that  mere  notice  of 
non-payment,  which  does  not  express  or  imply  notice  of 
dishonor,  is  not  such  notice  as  will  render  the  indorser 
liable. 

In  order  to  apply  the  rule  thus  stated  to  the  present 
case,  it  will  be  necessary  to  look  at  the  facts  stated  in  the 
report.  It  appears  that  the  presentment  and  demand  on 
the  promisor  were  made  on  the  morning  of  the  day  on 
which  the  note  fell  due.  Afterwards,  at  about  eleven 
o'clock,  the  plaintiff  caused  a  written  notice  to  be  left  at 
the  defendant's  dwelling-house,  of  which  the  following  is 
a  copy:  '  Boston,  May  4,  1838.     Mr.  Louis  Denuis.     Sir, — 


CHAPMAN   V.  KEANE.  167 

I  have  a  note  signed  by  C.  E.  Bowers  and  indorsed  by 
you  for  seven  hundred  dollars,  which  is  due  this  day  and 
unpaid;  payment  is  demanded  of  you,     C.  C.  Gilbert.' 

This  notice  comes  from  an  individual,  not  from  a  bank. 
It  was  delivered  at  eleven  a.  m.  There  would  then  be  no 
default  and  no  dishonor,  unless  a  demand  had  been  made 
on  the  promisor.  An  averment,  therefore,  that  it  was 
unpaid  did  not,  by  necessary  implication  or  reasonable 
intendment,  amount  to  an  averment  or  intimation  that 
payment  had  been  demanded  and  refused,  or  that  the  note 
had  been  otherwise  dishonored.  The  court  are  therefore 
of  opinion  that  the  notice  was  not  sufficient  to  render  the 
indorser  legally  liable. 


CHAPMA:N^   v.   KEANE. 
King's  Bench  of  England,  Easter,  1835.     3  Ad.  &  E.  193. 

The  holder  of  a  bill  may  avail  himself  of  notice  of  dishonor  given  in 
due  time  by  any  party  to  the  bill  (whose  liability  may  be  lixed  by  notice). 

Assumpsit  by  indorsee  against  drawer  of  a  bill  of  ex- 
change, averring  in  the  usual  form  presentment  to  the 
drawee,  non-payment  by  him,  and  notice  to  the  defendant. 
Plea,  that  the  defendant  had  not  due  notice  of  non-payment 
by  the  drawee,  tendering  issue  thereon.     Joinder. 

On  the  trial  before  Tindal,  C.  J.,  at  the  Guildford 
Summer  assizes,  1834,  it  appeared  that  the  plaintiff  had 
indorsed  the  bill,  before  it  was  due,  to  one  Wiltshire,  who 
left  it  with  the  plaintiff's  clerk  in  order  that  it  might  be 
presented  at  maturity  to  the  drawee.  It  was  dishonored 
upon  presentment  ;  whereupon  the  plaintiff's  clerk  gave 
notice  to  the  defendant.  The  notice  was  regular  in  all 
respects  except  that  the  clerk  gave  it  in  the  name  of  the 
plaintiff,  the  indorsee,  and  not  of  Wiltshire.  The  plain- 
tiff afterwards  took  up  the  bill  from  Wiltshire.  It  was 
objected  that  the  notice  ought  to  have  been  given  by  the 


168  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

holder  of  the  bill,  whereas  the  holder,  at  the  time  of  the 
notice,  was  Wiltshire.  His  lordship,  being  of  the  same 
opinion,  nonsuited  the  plaintiff.  In  Michaelmas  term  last, 
Law  obtained  a  rule  to  show  cause  why  the  nonsuit  should 
not  be  set  aside  and  a  verdict  entered  for  the  plaintiff. 

Lord  Denman,  C.  J.,  for  the  court. — On  the  trial  of 
this  action  by  the  indorser  against  the  drawer  of  a  bill  of 
exchange  the  Lord  Chief  Justice  of  the  Common  Pleas 
directed  a  nonsuit,  for  want  of  due  notice  of  dishonor. 
The  bill  had  been  indorsed  by  the  plaintiff,  by  the  desire 
of  Wiltshire,  who  had  discounted  it  and  left  it  in  the 
hands  of  the  plaintiff's  clerk  with  instructions  to  obtain 
payment  or  give  notice  of  dishonor.  He  did  give  notice  to 
the  defendant,  but  in  the  name  of  the  plaintiff,  not  in  that 
of  Wiltshire,  the  then  holder,  who  had  deposited  the  bill 
with  him. 

The  objection  to  the  plaintiff's  recovery  was  founded  on 
the  case  of  Tindal  v.  Brown,  1  T.  E.  167,  s.  c.  2  T.  K. 
186,  in  which  all  the  judges  except  Lord  Mansfield  con- 
sidered a  notice  by  one  who  was  not  the  holder  as  no 
notice,  on  the  ground  that  the  drawer  was  not  thereby 
apprised  of  the  holder's  intention  to  look  to  him  for  pay- 
ment ;  and  this  case  was  distinctly  recognized,  and  its 
principle  adopted,  by  Lord  Eldon  in  Ex  parte  Barclay,  7 
Ves.    597. 

Notwithstanding  these  high  authorities,  it  is  clear  from 
Jameson  v.  Swinton,  2  Camp.  373,  Wilson  v.  Swabey,  1 
Stark.  34,  and  also  from  the  learned  treatises  on  bills  of 
exchange,  that  the  contrary  doctrine  has  prevailed  in  the 
profession,  and  we  must  presume  a  contrary  practice  in 
the  commercial  world.  It  is  universally  considered  that  the 
party  entitled  as  holder  to  sue  upon  the  bill  may  avail  him- 
self of  notice  given  in  due  time  by  any  party  to  it.  In  the 
nisi  prius  cases  just  referred  to  no  express  allusion  was  made 
to  Tindal  v.  Brown  or  Ex  parte  Barclay  ;  but  we  can  hardly 
conceive  that  they  were  not  present  to  the  recollection  of 


SHOENBERGER  v.  THE  LANCASTER  SAVINGS,  ETC.     169 

Lord  Ellenborough  and  Mr.  Justice  Lawrence  or  the  coun- 
sel engaged.  These  learned  judges,  indeed,  decided  them 
at  nisi  prius,  but  without  question.  We  are  now  compelled 
to  determine  whether  the  case  of  Tindal  v.  Brown,  as  to 
this  point,  be  good  law.  We  think  that  it  is  not.  If  it 
were,  the  holder  might  secure  his  own  right  against  his 
immediate  indorser  by  regular  notice;  but  the  latter,  and 
every  other  party  to  the  bill,  would  be  deprived  of  all 
remedy  against  anterior  indorsers  and  the  drawer,  unless 
each  of  those  parties  should  in  succession  take  up  the  bill 
immediately  on  receiving  notice  of  dishonor,  a  supposition 
which  cannot  be  reasonably  made.  We  may  add  that  this 
point  was  not  necessary  for  the  decision  of  the  case,^  as 
this  court,  including  Lord  Mansfield,  granted  a  new  trial 
on  a  different  ground, 

Hule  absolute. 


SHOENBEKGER  v.    THE   LANCASTER   SAVINGS 

INSTITUTION. 

Supreme  Court  of  Pennsylvania,  1857.     2S  Penn.  St.  459. 

It  is  not  necessary  that  an  executor  of  an  indorser  of  a  note  should  have 
qualified  as  such  to  justify  the  holder  of  the  paper  in  sending  notice  of  dis- 
honor to  him. 

Action  upon  several  negotiable  promissory  notes  indorsed 
by  the  defendants'  testator.  The  defendants  were  named 
(with  others)  as  executors  in  the  testator's  will,  but  did 
not  qualify  or  act  as  such.  After  the  present  action,  but 
not  before,  they  renounced  (the  others  having  qualified 
under)  the  appointment  made  by  the  testator.  The  notes 
were  dishonored  at  maturity  and  two  of  the  defendants 
were  in  due  season  notified  of  the  fact.  Judgment  for  the 
plaintiffs.  Writ  of  error,  on  the  ground  that  the  notice 
of  dishonor  to  the  defendants  was  insufficient  to  bind  the 
testator's  estate. 

1  Tindal  v.  Brown,  supra. 


170  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

LowRiE,  J.,  for  the  court. — The  office  of  executor  in 
Pennsylvania  is  of  course  very  analogous  to  the  office  of 
executor  in  England,  but  their  duties  are  not  identical; 
and  we  always  run  the  risk  of  error  if  we  take  counsel 
from  English  analogies  and  overlook  the  instructions  of 
our  own  statutes.  At  death  a  man's  estate  really  passes 
into  the  hands  of  the  law  for  administration,  as  much 
when  he  dies  testate  as  when  intestate ;  except  that,  in  the 
former  case,  he  fixes  the  law  of  its  distribution  after  pay- 
ment of  debts,  and  usually  appoints  the  persons  who  are  to 
execute  his  will.  But  even  this  appointment  is  only 
provisional,  and  requires  to  be  approved  by  the  law  be- 
fore it  is  complete  ;  and  therefore  the  title  to  the  office 
of  executor  is  derived  rather  from  the  law  than  from  the 
will. 

The  law,  however,  allows  a  man  to  appoint  his  executors 
subject  to  this  approval,  and  treats  them,  when  appointed, 
as  entitled  to  the  office  until  they  renounce  it,  if  they  are 
not  legally  incompetent  to  fill  it.  If  they  are  competent, 
their  appointment  avails  to  make  them  representatives  of 
the  estate  so  far  as  relates  to  acts  in  which  they  are  merely 
passive,  such  as  receiving  notice  of  the  dishonor  of  a  note; 
for  they  have  immediate  power  to  qualify  themselves  to 
act  if  they  choose,  and  if  the  occasion  demands  it. 

"When  the  notices  in  this  case  were  served,  the  two  per- 
sons named  as  executors  and  to  whom  notice  was  given, 
had  power  to  take  the  oath  and  the  office  of  executors,  and 
might  have  done  so  the  next  hour  afterwards.  The  law 
allowed  the  testator  to  appoint  them,  and  he  did  so,  and 
they  may  be  treated  as  representing  his  estate  for  the  pur- 
pose of  such  notice,  unless  they  renounced  at  the  register's 
office,  or  at  least  until  they  refuse  the  notice  on  the  ground 
that  they  do  not  intend  to  serve.  He  Avho  is  bound  to  give 
such  notice  is  not  in  fault  in  giving  it  to  one  who  is  thus 
potentially  an  executor,  even  though  others  have  already 
become  so  actually  by  taking  the  oath  of  office,  unless  at 
least  he  is  warned  that  such  notice  is  not  accepted.      If 


BOWLING  1-.  HAKRISON.  171 

the  estate  suffers  from  such  a  notice,  it  is  not  the  fault  of 
him  that  gave  it. 

It  was  not  erroneous  to  give  the  notice  on  the  4th  of 
July,  for  a  statute  expressly  allows  this. 

Judgment  affirmed. 

BOWLING  V.   HAEKISOK 

Supreme  Court  of  the  United  States,  December,  1847.     6  How.  248. 

If  the  parties  reside  in  the  same  city  or  town,  the  indorser  is  entitled  to 
personal  notice  of  the  dishonor  of  the  bill  or  note.  Notice  by  the  mail  in 
such  case  is  not  sufhcient. 

Writ  of  error,  on  instructions  to  the  jury,  who  found  for 
the  defendant.  The  action  was  by  the  indorsee  against  an 
indorser  of  a  promissory  note,  on  which  was  a  memorandum 
in  these  words,  referring  to  the  defendant,  '  Third  indorser, 
J.  P.  Harrison,  lives  at  Vicksburg.'  The  owner  of  the 
note  at  maturity  lived  in  Maryland,  the  defendant  at  said 
Vicksburg,  in  Mississippi.  The  note  was  sent  by  the  owner 
to  the  Planters'  Bank  of  Vicksburg  for  collection.  It  was 
duly  presented  for  payment  and  dishonored;  and  notice 
was  then  left  in  the  post-office  addressed  to  the  defendant, 
but  not  received  by  him.  The  errors  complained  of  appear 
in  the  opinion. 

Grier,  J.,  for  the  court.  —  The  first  assignment  of  error 
in  this  case  is  to  the  instruction  given  by  the  court  to  the 
jury,  'that,  to  charge  an  indorser,  if  he  lived  in  the  town  in 
which  the  note  was  made  payable,  the  notice  must  be  per- 
sonal, unless  he  had  agreed  to  receive  it  elsewhere,  or 
unless,  by  custom  and  usage  of  the  bank  at  which  the  note 
is  payable,  the  notice  of  non-payment  was  left  at  the  post- 
office.' 

As  the  only  question  on  the  trial  of  the  cause  was  the 
sufficiency  of  notice  left  at  the  post-office  at  Vicksburg,  to 
charge  an  indorser  residing  there,  and  not  whether  a  copy 


172  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

left  at  his  dwelling-house  or  place  of  business  would  be 
proper,  the  phrase  '  personal  notice '  was  evidently  intended 
and  understood  to  include  the  latter  in  opposition  to  the 
former.  This  instruction  is,  therefore,  not  objected  to  on 
the  ground  of  any  inaccuracy  of  expression  on  that  point. 
But  the  complaint  is,  that  the  rule  of  law  on  this  subject 
was  erroneously  enunciated  by  the  court,  in  stating  the  con- 
ditions under  which  a  personal  service  of  notice  on  an 
indorser  is  required  to  be  '  residence  in  the  town  where  the 
note  was  made  payable.' 

It  is  true,  the  terms  in  which  the  rule  of  law  on  that  sub- 
ject is  usually  stated  differ  from  those  used  by  the  court  on 
this  occasion.  In  Williams  v.  United  States  Bank,  2  Peters, 
96, 101,  it  is  thus  stated  by  this  court :  '  If  the  parties  reside 
in  the  same  city  or  town,  the  indorser  must  be  personally 
noticed  of  the  dishonor  of  the  bill  or  note,  either  verbally  or 
in  writing,  or  a  written  notice  must  be  left  at  his  dwelling- 
house  or  place  of  business.'  Mr.  Justice  Story,  Story, 
Bills,  §  312,  states  the  rule  in  these  words :  '  Where  the 
party  entitled  to  notice  and  the  holder  reside  in  the  same 
town  or  city,  the  general  rule  is,  that  the  notice  should  be 
given  to  the  party  entitled  to  it,  either  personally  or  at  his 
domicile  or  place  of  business.' 

The  indorsee  or  owner  of  the  note,  in  this  case,  resided  in 
Maryland,  and  the  indorser  in  Vicksburg;  and  it  is  con- 
tended that,  as  they  are  the  only  parties,  and  do  not  reside 
in  the  same  place,  the  rule  is  inapplicable  to  the  case.  But 
we  are  of  opinion  that,  whether  we  regard  the  reasons  upon 
which  this  rule  is  founded,  or  a  correct  construction  of  the 
terms  in  which  it  is  usually  stated,  the  instruction  given  by 
the  court  below  was  correct,  and  not  such  as  to  mislead  the 
jury  in  the  application  of  the  law  to  the  circumstances  of 
the  case  before  them. 

The  best  evidence  of  notice  is  proof  of  personal  service  on 
the  party  to  be  affected  by  it,  or  by  leaving  a  copy  at  his 
dwelling.  Depositing  a  notice  in  the  post-offi.ce  affords  but 
presumptive  evidence  of  its  reception,  and  is  permitted  to  be 


BOWLING  V.  HARRISON.  173 

substituted  for  the  former  only  wliere  the  latter  would  be  too 
ineouveuient  or  expensive.  Hence,  when  the  convenience 
of  the  public  post  is  not  needed  for  the  purpose  of  transmis- 
sion or  conveyance,  there  is  no  reason  for  its  use,  or  for 
waiving  the  more  stringent  and  certain  evidence  of  notice ; 
and,  therefore,  in  the  practical  application  of  the  rule,  the 
relative  position  of  the  person  giving  the  notice  and  the 
party  receiving  it  forms  the  only  criterion  of  the  necessity 
for  relaxing  it. 

A  very  large  portion  of  the  commercial  paper  used  in  this 
country  is  similar  to  that  which  is  the  subject  of  the  present 
suit.  They  are  notes  made  payable  at  a  certain  bank.  The 
last  indorsee  or  owner  transmits  it  to  that  bank  for  collec- 
tion ;  if  funds  are  not  deposited  there  to  meet  it  when  due, 
it  is  handed  to  a  notary  or  agent  of  the  bank,  who  makes 
demand  and  protest,  and  gives  notice  of  its  dishonor  to  the 
indorsers ;  if  they  live  in  the  same  town  or  city  where  the 
bank  is  situated  and  the  demand  made,  arid  'where  the  note 
was  payable,'  he  serves  it  personally,  or  at  their- residence 
or  place  of  business ;  if  they  live  at  a  distance,  so  that  such 
a  service  would  be  inconvenient  and  expensive,  he  sends  the 
notice  by  mail  to  the  nearest  post-office,  or  such  other  place 
as  may  have  been  designated  by  the  party  on  whom  it  is  to 
be  served.  This  is  and  has  been  the  daily  practice  and 
construction  of  the  rule  in  question  over  the  whole  country, 
and  the  only  one  consonant  with  reason. 

This  practical  application  of  the  rule  is  correctly  stated 
by  the  court  in  their  instruction  to  the  jury  as  connected 
with  the  circumstances  of  the  case  before  them,  and  also 
within  its  terms  as  it  is  usually  stated  in  the  books.  The 
term  'holder'  is  properly  applied  to  the  person  having 
possession  of  the  paper  and  making  the  demand,  whether 
in  his  own  right  or  as  agent  for  another.  The  Planters' 
Bank  of  Vicksburg  were  the  '  holders '  of  this  note  for  col- 
lection, and  were  bound  to  give  notice  to  all  the  indorsers. 
Smedes  v.  The  Utica  Bank,  20  Johns.  372.  The  notary, 
also,  who  held  the  note  as  agent  of  the  owner,  for  the  pur- 


174  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

pose  of  making  demand  and  protest,  may  be  properly  con- 
sidered as  the  '  holder '  within  the  letter  and  spirit  of  this 
rule.  On  a  careful  examination  of  the  very  numerous  cases 
in  the  books,  in  which  the  rule  under  consideration  has  been 
enunciated  in  the  terms  above  stated,  they  will  be  found 
not  essentially  to  differ  from  the  present  in  their  circum- 
stances. In  some  instances,  also,  the  rule  has  been  stated 
in  the  terms  used  by  the  court  below.     See  Bayley,  Bills. 

An  exception  is  taken,  also,  to  the  instruction  of  the 
court,  'that  the  memorandum  attached  to  the  note  in  this 
case  was  not  a  sufficient  agreement  to  receive  notice  at  the 
post-office,  and  to  dispense  with  personal  notice  on  the  in- 
dorser ;  and  that  the  custom  and  usage  of  the  bank,  as 
proved  in  this  case,  were  not  sufficient  to  disjoense  with 
personal  notice.' 

The  memorandum  is  in  the  following  words :  'Third  in- 
dorser,  J.  P.  Harrison,  lives  at  Vicksburg.'  The  only  direct 
evidence  of  usage  was,  '  that,  for  several  years  prior  to  the 
maturity  of  said  note,  it  had  been  the  usage  of  the  Planters' 
Bank  of  Vicksburg  to  have  notice  served  personally  upon 
the  indorsers  resident  in  Vicksburg,  unless  there  was  a 
memorandum  on  the  note  designating  a  place  where  notice 
was  to  be  served ;  then  the  notice  was  left  at  such  place.' 
This  is,  in  fact,  no  usage  peculiar  to  Vicksburg,  but  the 
general  rule  of  commercial  law.  The  notary  appears  to 
have  mistaken  this  memorandum  for  an  agreement  to  re- 
ceive notice  at  the  Vicksburg  post-office ;  and,  however 
willing  to  excuse  himself,  he  has  not  ventured  to  swear 
directly  that  there  was  any  known  usage  to  justify  this 
construction,  or  rather  misconstruction,  of  this  memoran- 
dum. The  counsel  for  plaintiff  in  error  complain  that  the 
court  did  not  submit  it  to  the  jury  to  say  whether  an  infer- 
ence might  not  be  drawn,  from  some  equivocal  or  obscure 
expressions  of  the  witness,  that  there  was  such  a  usage. 

It  is  true,  the  jury  are  the  proper  judges  of  the  credibility 
and  weight  of  testimony,  but  the  court  should  not  instruct 
them   to    presume   or   infer  important  facts,    unless  there 


BOWLING  V.  HARRISON.  175 

be    testimony   which,    if   believed,  would    justify    such   a 
conclusion. 

It  is  of  the  utmost  importance  to  commercial  transactions 
that  the  rules  of  law  on  the  subject  of  notice  which  is  to 
charge  an  indorser  be  stable  and  certain,  and  not  suffered 
to  fluctuate  and  vary  with  the  notions  or  caprice  of  banking 
corporations  or  village  notaries.  A  usage,  to  be  binding, 
should  be  definite,  uniform,  and  well  known.  It  should  be 
established  by  clear  and  satisfactory  evidence,  so  that  it  may 
be  justly  presumed  that  the  parties  had  reference  to  it  in 
making  their  contract.  Every  day's  experience  shows  that 
notaries,  in  many  places,  fall  into  loose  ways  of  performing 
their  duties,  either  through  negligence  or  ignorance ;  and 
courts  should  be  cautious  how  they  encourage  juries  to  pre- 
sume usages  and  customs  contrary  to  the  settled  rules  of 
law,  in  order  to  sanction  the  mistakes  or  misconceptions 
of  careless  or  incompetent  officers.  It  was  as  easy  to  have 
written  the  memorandum  on  this  note  :  'The  indorser,  J.  P. 
Harrison,  agrees  to  receive  notice  at  the  Vicksburg  post- 
office,'  as  to  write  it  in  its  present  form ;  and  one  can 
hardly  conceive  of  the  possibility  of  a  well-known  and  es- 
tablished usage,  that  a  written  memorandum  should  be  con- 
strued without  any  regard  to  its  terms  or  plain  meaning. 
Those  who  affirm  the  existence  of  such  a  strange  usage 
should  be  held  to  strict  proof  of  it ;  and  the  court  were  right 
in  not  submitting  it  to  the  jury  to  infer  such  an  improbable 
and  unreasonable  custom,  by  forced  or  astute  construction 
of  equivocal  expressions  from  a  willing  witness. 

Let  the  Judgment  be  affirmed. 


176  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

MUNN  V.  BALDWIN. 

Supreme  Court  of  Massachusetts,  March,  1810.     6  Mass.  316. 

Putting  a  letter  into  the  post-office,  directed  to  the  iudorser  of  a  bill  of 
exchange,  and  containing  notice  of  protest  for  non-payment,  is  sufficient, 
though  it  does  not  appear  that  the  letter  was  ever  received. 

Assumpsit  upon  a  bill  of  exchange  drawn  in  Boston  on 
Justin  Smith,  of  Philadelphia,  in  favor  of  the  defendants, 
and  by  them  indorsed  to  the  plaintiff. 

The  facts  (agreed)  were,  that  the  notary  in  Philadelphia, 
who  protested  the  bill  for  non-payment,  on  the  day  of  the 
protest,  or  on  the  morning  of  the  next  day,  before  the  mail 
for  Boston  was  closed,  put  a  letter  into  the  post-office  in 
Philadelphia  directed  to  the  defendants  in  Boston,  and  con- 
taining the  necessary  notice  ;  but  the  case  adds :  '  It  does 
not  appear  that  the  defendants  ever  received  that  letter.' 

Parsons,  C.  J.  The  only  question  in  this  action  is 
whether  the  defendants  had  legal  notice  of  the  protest  for 
non-payment  of  the  bill  of  exchange.  After  taking  a  little 
time  to  advise,  we  are  all  of  opinion  that  the  notice  is  prima 
facie  sufficient.  The  holder  of  the  bill  made  use  of  the  usual 
mode  of  conveying  notice,  by  putting  the  letter  containing  it 
into  the  post-office ;  and  a  mode  to  which  the  indorsers  must 
be  considered  as  assenting,  or  the  negotiating  of  bills  payable 
at  a  distance  would  be  greatly  embarrassed,  if  not  obstructed. 
For  who  would  buy  a  bill,  to  be  presented  for  payment  in  a 
remote  part  of  the  United  States,  if  it  was  to  be  understood 
that  if  not  paid,  he  must  be  at  the  expense  of  some  priv^ate 
messenger,  Avhose  accidental  sickness  or  detention  on  the 
road  would  defeat  his  remedy  ? 

When  a  letter  is  put  into  the  regular  post-office,  we  pre- 
sume that  it  was  sent  and  received  agreeably  to  its  direction, 
unless  the  contrary  is  proved.  Here  there  is  no  evidence  on 
that  point ;  the  case  only  stating,  that  it  does  not  appear  that 


BANK   OF  ALEXi\J^DRIA   v.  SWANN.  177 

the  letter  was  received  by  the  defendants  ;  and  yet  they 
might,  in  fact,  have  received  it.  If  it  was  agreed  tliat  the 
letter  miscarried,  and  that  the  defendants  did  not  receive  it, 
it  might  be  a  question  at  whose  risk  the  letter  was  sent  by 
the  mail ;  and  whether,  the  regular  mail  being  the  method  of 
conveyance  assented  to  by  the  defendants,  they  must  not  be 
answerable  for  the  miscarriage,  in  the  same  manner  as  if  a 
letter  sent  by  their  private  servant  had  not  been  delivered  by 
him.  On  this  last  point,  however,  it  is  not  necessary  now  to 
decide.  But  on  the  facts  stated,  we  are  satisfied  that  the 
notice  must  be  considered  as  sufficient  to  make  the  indorsers 
liable,  and  that  the  plaintiff  ovight  to  recover. 

Therefore,  conformably  to  the  agreement  of  the  parties,  let 
the  defendants  be  called. 


BANK   OF  ALEXANDRIA  v.  SWANN. 

Supreme  Court  of  the  United  States,  January,  1835.     9  Peters,  33. 

Notice  of  the  default  of  the  maker  of  a  note  put  into  the  post-office 
early  enough  to  be  sent  by  the  mail  of  the  succeeding  day,  is  seasonable. 

The  ease  is  stated  in  the  opinion  of  the  court. 

Thompson,  J.  This  suit  was  brought  in  the  Circuit  Court 
of  the  District  of  Columbia,  for  the  County  of  Alexandria, 
upon  a  promissory  note  made  by  Humphrey  Peake,  and  in- 
dorsed by  the  defendant  in  error.  Upon  the  trial  the  jury 
found  a  special  verdict,  upon  which  the  court  gave  judgment 
for  the  defendant,  and  the  case  comes  here  upon  a  writ  of 
error. 

The  points  upon  which  the  decision  of  the  case  turns 
resolve  themselves  into  two  questions  : 

1.  Whether  notice  of  the  dishonor  of  the  note  was  given 
to  the  indorser  in  due  time  ; 

2.  Whether  such  notice  contained  the  requisite  certainty 
in  the  description  of  the  note. 

The  note  bears  date  on  the  twenty-third  day  of  June,  1829; 

12 


178  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

and  is  for  the  sum  of  $1,400,  payable  sixty  days  after  date  at 
the  Bank  of  Alexandria.  The  last  day  of  grace  expired  on 
the  25th  of  August,  and  on  that  day  the  note  was  duly 
presented,  and  demand  of  payment  made  at  the  bank,  and 
protested  for  non-payment ;  and  on  the  next  day  notice 
thereof  was  sent  by  mail  to  the  indorser,  who  resided  in  the 
city  of  Washington. 

The  general  rule,  as  laid  down  by  this  court  in  Lenox  v. 
Roberts,  2  Wheat.  373,  4  Cond.  163,  is,  that  the  demand  of 
payment  should  be  made  on  the  last  day  of  grace,  and  notice 
of  the  default  of  the  maker  be  put  into  the  post-ofiice  early 
enough  to  be  sent  by  the  mail  of  the  succeeding  day.  The 
special  verdict  in  the  present  case  finds,  that  according  to  the 
course  of  the  mail  from  Alexandria  to  the  city  of  Washington, 
all  letters  put  into  the  mail  before  half-past  eight  o'clock  p.m., 
at  Alexandria,  would  leave  there  some  time  during  that  night, 
and  would  be  deliverable  at  Washington  the  next  day,  at  any 
time  after  eight  o'clock  a.m.,  and  it  is  argued  on  the  part  of 
the  defendant  in  error,  that  as  demand  of  payment  was  made 
before  three  o'clock  p.m.,  notice  of  the  non-payment  of  the 
note  should  have  been  put  into  the  post-office  on  the  same 
day  it  was  dishonored,  early  enough  to  have  gone  with  the 
mail  of  that  evening.  The  law  does  not  require  the  utmost 
possible  diligence  in  the  holder  in  giving  notice  of  the  dis- 
honor of  the  note ;  all  that  is  required  is  ordinary  reason- 
able diligence  :  and  what  shall  constitute  reasonable  diligence 
ought  to  be  regulated  with  a  view  to  practical  convenience, 
and  the  usual  course  of  business.  In  the  case  of  the  Bank 
of  Columbia  v.  Lawrence,  1  Peters,  578,  583,  it  is  said  by 
this  court  to  be  well  settled  at  this  day,  that  when  the  facts 
are  ascertained,  and  are  undisputed,  what  shall  constitute  due 
diligence  is  a  question  of  law  ;  that  this  is  best  calculated  for 
the  establishment  of  fixed  and  uniform  rules  on  the  subject, 
and  is  highly  important  for  the  safety  of  holders  of  commer- 
cial paper.  The  law,  generally  speaking,  does  not  regard  the 
fractions  of  a  day  ;  and,  although  the  demand  of  payment  at 
the  bank  was  required  to  be  made  during  banking  hours,  it 


LAWSON  V.  THE   FARMERS'  BANK  OF  SALEM.       179 

would  be  unreasonable,  and.  against  what  the  special  verdict 
finds  to  have  been  the  usage  of  the  bank  at  that  time,  zo  re- 
quire notice  of  non-payment  to  be  sent  to  the  indorser  on  the 
same  day.  This  usage  of  the  bank  corresponds  with  the  rule 
of  law  on  the  subject.  If  the  time  of  sending  the  notice  is 
limited  to  a  fractional  part  of  a  day,  it  is  well  observed  by 
Chief  Justice  Hosmer,  in  the  case  of  the  Hartford  Bank  v. 
Stedman  &  Gordon,  3  Conn.  489,  495,  that  it  will  always 
come  to  a  question,  how  swiftly  the  notice  can  be  conveyed. 
We  think,  therefore,  that  the  notice  sent  by  the  mail,  the 
next  day  after  the  dishonor  of  the  note,  was  in  due  time. 


LAWSON  V.  THE  FARMEKS'  BANK  OF  SALEM. 

Supreme  Court  of  Ohio,  January,  1853.     1  Oliio  St.  206. 

To  charge  an  indorser  of  a  bill  who  resides  in  another  place,  the  li older 
maij  send  the  notice  by  the  mail  of  the  day  of  default,  but  if  he  does  not,  he 
viust  deposit  the  letter  containing  the  notice,  directed  to  the  indorser,  in 
the  post-office  in  time  to  be  sent  by  the  mail  of  the  day  next  after  the  day 
of  the  dishonor,  unless  the  mail  of  that  day  be  made  up  and  closed  before 
early  business  hours  ;  and  if  there  be  no  mail  on  that  day,  or  if  the  mail 
close  before  early  business  hours,  then  by  the  next  practicable  mail. 

The  holder  of  a  bill  is  not  bound  to  give  notice  of  the  dishonor  to  more 
than  one  indorser;  and  this  and  every  other  indorser  has  the  same  time 
for  giving  notice  to  prior  parties  that  the  holder  has. 

After  an  agent  to  whom  a  bill  is  sent  for  collection  has  given  notice  to 
the  principal,  the  same  time  is  allowed  to  the  principal  for  giving  notice 
as  if  he  liad  liimself  been  an  indorser  receiving  notice  from  the  holder. 

Error  to  the  Court  of  Common  Pleas  of  Columbiana 
County,  reserved  in  the  District  Court  for  decision  by  the 
Supreme  Court. 

The  original  action  was  assumpsit  for  recover}^  against 
Lawson  &  Covode,  as  indorsers  of  a  bill  of  exchange  in  the 
following  form  :  '  Waterville,  April  25, 1848,  $4,000.  Ninety 
days  after  date,  pay  to  the  order  of  Lawson  &  Covode  four 
thousand  dollars,  value  received,  and  place  the  same  to  the 
account  of  yours,  etc.,  W.  F.  Jordan.     To  J.  Jordan  &  Son, 


180  CASES   OX   BILLS,  NOTES,  AND   CHEQUES. 

Pittsburgh.'     Indorsed:  'Pay  to  Farmers'  Bank  of  Salem. 
Lawson  &  Covode.'     Accepted  by  '  J.  Jordan  &  Son.' 

The  declaration  counts  upon  the  instrument,  and  also  con- 
tains the  common  counts.     Plea,  non  assumpsit. 

It  appears  that  this  bill,  which  was  drawn  and  indorsed  in 
this  State,  was  discounted  by  the  Bank  of  Salem,  and  the 
money  paid  to  the  acceptors  thereof.  Subsequently  it  was 
indorsed  by  the  Bank  of  Salem  to  the  Exchange  Bank  of 
Pittsburgh  for  collection,  Jordan  &  Son  living  in  that  city. 
It  matured  in  the  hands  of  the  Exchange  Bank  of  Pittsburgh 
on  the  twenty-seventh  day  of  July,  1848,  and  being  dis- 
honored by  the  acceptors  in  Pittsburgh  was  protested  for 
non-payment  by  a  notary. 

On  the  trial  of  the  cause  in  the  Common  Pleas,  the  bank 
gave  the  bill  in  evidence,  and  the  protest  attached  thereto, 
dated  July  27,  1848,  also  a  certified  copy  of  the  notarial 
record  of  the  notary,  with  j^roof  of  his  death  since  the  protest 
of  the  bill.  The  defendants  below  objected  to  this  last  tes- 
timony, but  the  court  admitted  it.  During  the  trial  the  bank 
called  J  B  and  J  D  as  witnesses,  both  being  stock-holders 
and  directors  of  the  Salem  Bank  not  only  at  that  time  but 
also  when  the  bill  was  discounted  and  reached  its  maturity. 
Their  testimony  was  objected  to,  but  received. 

The  bank  having  rested,  the  defendants  below  gave  in 
evidence  the  notice  of  protest  sent  to  the  Salem  Bank  by  the 
notary,  and  produced  by  the  cashier  of  the  Salem  Bank. 
And  evidence  having  been  given  that  the  Exchange  Bank 
of  Pittsburgh  closed  at  three  o'clock  p.m.  on  the  27th  July, 
1848;  that  the  notary's  office  was  about  one  square  from 
the  Pittsburgh  post-office;  that  the  mail  left  Pittsburgh 
for  Salem  at  ten  o'clock  a.  m.  on  the  28th  of  July,  and  was 
closed  at  ten  minutes  after  nine  o'clock  a.  m.  ;  and  that  the 
business  hours  of  Pittsburgh  were  from  seven  o'clock  a.  m. 
till  dusk, — the  parties  rested.  The  notarial  protest  does 
not  state  when  the  notices  were  deposited  in  the  post- 
office;  but  the  notice  to  the  Salem  Bank,  ^vhich  covered 
the  notice  to  Lawson  &  Covode,  the  accommodation  in- 


LAWSON  V.  THE  FARMERS'  BANK  OF  SALEM.        181 

dorsers,  is  mail-marked  at  tlie  Pittsburgh  post-office,  July 
29,  1848. 

Instructions  to  the  jury  were  objected  to  by  the  defend- 
ants, and  the  jury  returned  a  verdict  for  the  plaintiff 
for  14,513.33. 

Bartley,  J.,  (after  considering  the  question  of  the  com- 
petency of  the  witnesses,  J  B  and  J  D).  Touching  the 
second  question,  then,  did  the  Court  of  Common  Pleas  err 
in  charging  the  jury  that,  if  the  notice  to  the  indorsers  of 
the  demand  and  non-payment  of  the  bill  was  deposited  in 
the  post-office  at  Pittsburgh  at  any  time  during  tlie  day 
after  the  day  of  dishonor,  without  regard  to  the  time  of 
the  departure  of  the  mail  for  that  day,  it  would  be  suffi- 
cient notice;  and,  moreover,  that  if  it  was  found  incon- 
venient to  deposit  the  notice  in  the  post-office  in  time  for 
the  mail  of  that  day,  it  was  in  proper  time  if  the  notice 
was  deposited  in  time  to  be  sent  off  by  the  next  mail  of 
the  day  next  after  the  day  following  the  day  of  the  dis- 
honor of  the  bill  ? 

This  involves  a  very  important  question  of  the  law  mer- 
chant, and  it  is  not  a  little  surprising  that  there  should 
remain  any  doubt  or  uncertainty,  at  this  late  day,  upon  a 
question  of  such  vital  importance  to  the  interest  of  com- 
mercial countries,  respecting  the  duties  and  liabilities  of 
holders  and  parties  to  dishonored  paper.  And  it  is  a 
matter  of  no  small  moment,  that  a  question  which  enters 
so  largely  as  does  this  into  the  every-day  business  trans- 
actions of  different  commercial  states  and  countries  should 
be  settled,  not  only  upon  a  certain  and  unvarying,  l)ut  also 
upon  a  uniform  basis. 

The  liability  of  the  indorser  is  strictly  conditional, 
dependent  l)oth  upon  due  demand  of  payment  upon  the 
maker  or  acceptor,  and  also  due  and  legal  notice  of  the 
non-payment.  The  purpose  and  object  of  such  demand 
and  notice  is  to  enable  the  indorser  to  look  to  his  own 
interest,  and  take  immediate  measures  for  his  indemnity. 


182  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

The  demand  and  notice  being  conditions  precedent  to  tlie 
indorser's  liability,  it  is  incumbent  on  the  holder  to  make 
clear  and  satisfactory  proof  of  them  before  he  can  recover. 
The  plaintiffs  in  error  in  this  case,  being  accommodation 
indorsers,  may  well  insist  upon  strict  proof  of  due  dili- 
gence in  giving  notice  of  the  dishonor  of  the  bill. 

The  law  does  not  require  the  utmost  diligence  in  the 
holder,  in  giving  notice  of  the  dishonor  of  a  bill  or  not6. 
All  that  is  requisite  is  ordinary  or  reasonable  diligence. 
And  this  is  not  only  the  rule  and  requirement  of  the  law 
merchant,  but  a  statutory  provision  of  this  State.  But 
what  amounts  to  due  diligence  or  reasonable  notice  is, 
when  the  facts  are  ascertained,  purely  a  question  of  law, 
settled  '  with  a  view  to  practical  convenience,  and  the 
usual  course  of  business.' 

The  question  was  at  one  time  strenuously  contested, 
whether  due  diligence  did  not  require  that,  where  the 
parties  reside  in  the  same  place,  the  notice  of  non-payment 
should  be  given  on  the  day  of  the  dishonor  of  the  bill; 
and  where  the  parties  reside  in  different  places,  should  be 
sent  by  the  mail  of  that  day,  or  the  first  possible  or  prac- 
ticable mail  after  the  default.  Tindal  v.  Brown,  1  T.  E,. 
167;  Darbishire  v.  Parker,  6  East,  3;  Marius,  Bills,  24. 
But  the  rule  was  established  and  is  supported  by  the  great 
weight  of  authority,  that,  where  the  parties  reside  in 
different  places,  and  the  post  is  the  mode  of  conveyance 
adopted,  although  it  was  in  no  case  necessary  to  send  the 
notice  b}*  the  post  of  the  same  day  of  the  dishonor,  or  of 
the  knowledge  of  the  dishonor,  — the  holder  being  entitled 
to  the  whole  of  that  day,  being  the  day  of  the  dishonor,  or 
knowledge  of  the  dishonor,  to  prepare  his  notice,  —  yet 
that  the  notice  would  be  insufficient  unless  put  into  the 
post-office  in  time  to  go  by  the  next  mail  after  that  day. 
And  this  is  in  conformity  with  the  rule  laid  down  by  Mr. 
Chitty  in  his  learned  treatise  on  Bills  of  Exchange,  in  the 
following  explicit  language:  'When  the  parties  do  not 
reside  in  the  same  place,  and  the  notice  is  to  be  sent  by 


LAWSON  i;.  THE  FAKMEES'  BANK  OF  SALEM.       183 

general  post,  then  the  holder  or  party  to  give  the  notice 
must  take  care  to  forward  notice  by  the  post  of  the  next 
day  after  the  dishonor,  or  after  he  receives  notice  of  such 
dishonor,  whether  that  jiost  sets  off  from  the  place  where 
he  is  early  or  late  ;  and  if  there  be  no  post  on  such  next 
day,  then  he  must  send  off  notice  by  the  very  next  post 
that  occurs  after  that  day.'     Chitty,  Bills,  485. 

This  is  in  accordance  with  the  rule  as  settled  by  the 
Supreme  Court  of  the  United  States.  In  Lenox  v.  Eoberts, 
2  Wheat.  373,  Chief  Justice  Marshall  says:  '  It  is  the 
opinion  of  the  court  that  notice  of  the  default  of  the  maker 
should  be  put  into  the  post-office  early  enough  to  be  sent 
by  the  mail  of  the  day  succeeding  the  last  day  of  grace.' 
And  in  the  case  of  the  Bank  of  Alexandria  v.  Swann,  9 
Peters,  33,  Mr.  Justice  Thompson  approved  of  the  general 
rule  laid  down  in  the  case  of  Lenox  ik  Roberts,  holding 
that  notice  of  the  dishonor  need  not  be  forwarded  on  the 
last  day  of  grace,  but  should  be  sent  by  the  mail  of  the 
next  day  after  the  dishonor. 

The  same  rule  was  adopted  by  Mr.  Justice  "Washington  in 
the  case  of  the  United  States  v.  Parker's  Administrators, 
4  Wash.  465;  and  in  which  case  subsequently  that  decision 
was  affirmed  on  error  by  the  Supreme  Court,  12  Wheat. 
559.  The  same  rule  received  the  sanction  of  Mr.  Justice 
Story,  in  the  case  of  the  Seventh  Ward  Bank  v.  Hanrick, 
2  Story,  416,  although,  in  the  case  of  Mitchell  v.  Degrand, 
1  Mason,  180,  he  appears  to  have  been  disposed  to  even 
greater  strictness,  holding  that  when  a  bill  is  once  dis- 
honored, the  holder  is  bound  to  give  notice  by  the  next 
practicable  mail,  to  the  parties  whom  he  means  to  charge 
for  the  default.  This,  however,  is  explained  by  Mr. 
Justice  Washington  in  the  case  of  United  States  v.  Parker's 
Administrators,  to  mean  that  the  notice  should  be  put  into 
the  office  in  time  to  be  sent  by  the  mail  of  the  succeeding 
day.  This  rule,  adopted  by  the  Supreme  Court  of  the 
United  States,  and  which  is  supported  by  the  great  weight 
of  authority  in  England  and  in  the  several  States  of  the 


184  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

Union  in  which  the  question  appears  to  have  been  settled 
by  reported  adjudications,  is  subject  to  some  qualilicationj 
relaxing  its  rigor.  If  two  mails  leave  the  same  day  on 
the  route  to  the  place  of  the  residence  of  the  indorser,  it 
is  sufficient  to  deposit  the  notice  in  the  post-office  in  time 
to  go  by  either  mail  of  that  day,  inasmuch  as  the  fractions 
of  the  day  are  not  counted.  Whitewell  v.  Johnson,  17 
Mass.  449,  454;  Howard  v.  Ives,  1  Hill  (N.  Y.),  263. 

And  for  the  reason  that  the  mail  of  the  day  succeeding 
the  day  of  the  default  may  go  out  in  some  places  soon 
after  midnight  or  at  a  very  early  hour  in  the  morning, 
and  is  sometimes  made  up  and  closed  the  evening  preced- 
ing, it  has  been  adjudged  that,  inasmuch  as  the  holder  is 
allowed  till  the  day  after  the  day  of  default  to  send  off 
the  notice,  reasonable  diligence  would  not  require  him  to 
deposit  the  notice  in  the  post-office  at  an  unreasonably 
early  hour,  or  before  a  reasonable  time  can  be  had  for 
depositing  the  notice  in  the  post-office  after  early  business 
hours  of  that  day.  The  rule,  as  qualified  and  settled  by 
the  late  authorities,  and  which  I  take  to  be  the  correct  one, 
is  that  where  the  parties  reside  in  the  same  place  or  city, 
the  notice  may  be  given  on  the  day  of  default;  but  if 
given  at  any  time  before  the  expiration  of  the  day  there- 
after, it  will  be  sufficient;  and  when  the  parties  reside  in 
different  places  or  States,  the  notice  may  be  sent  by  the 
mail  of  the  day  of  the  default;  but  if  not,  it  must  be 
deposited  in  the  office  in  time  for  the  mail  of  the  next 
day,  provided  the  mail  of  that  day  be  not  made  up  and 
closed  at  an  unreasonably  early  hour.  If,  however,  the 
mail  of  that  day  be  closed  before  a  reasonable  time  after 
early  business  hours,  or  if  there  be  no  mail  sent  out  on 
that  day,  then  it  must  be  deposited  in  time  for  the  next 
possible  post.  In  the  case  of  Downs  v.  The  Planters' 
Bank,  1  Sm.  &  M.  261,  and  also  the  case  of  Chick  v. 
Pillsbury,  24  Me.  458,  the  doctrine  on  this  subject  has  been 
more  fully  examined  than  perhaps  in  any  of  the  older 
cases;  and  the  rule  adopted  is  that  the  notice,  in  order  to 


LAWSON  V.  THE  FARMERS'  BANK  OF  SALEM.        185 

charge  the  indorser  living  in  another  phice  or  State,  must 
be  deposited  in  the  post-office  in  time  to  be  sent  by  the 
mail  of  the  day  succeeding  the  day  of  the  dishonor,  pro- 
viding the  mail  of  that  day  be  not  closed  at  an  unreason- 
ably early  hour,  or  before  early  and  convenient  business 
hours.  And  this  rule  is  well  sustained  by  authority. 
Fullerton  et  al.  v.  The  Bank  of  the  United  States,  1 
Peters,  605,  618;  Eagle  Bank  v.  Chapin,  3  Pick.  180,  183; 
Talbot  V.  Clark,  8  Pick.  51;  Carter  v.  Burley,  9  N.  H.  559, 
570;  Farmers'  Bank  of  Maryland  v.  Duvall,  7  Gill  & 
Johns.  79;  Freemans'  Bank  v.  Perkins,  18  Me.  292;  Mead 
V.  Engs,  5  Cowen,  303;  Sewall  v.  Eussell,  3  Wend.  276; 
Brown  v.  Ferguson,  4  Leigh,  37;  Dodge  v.  Bank  of  Ken- 
tucky, 2  Marshall,  610;  Hickman  v.  Eyan,  5  Littell,  24; 
Hartford  Bank  v.  Steedman,  3  Conn.  489;  Brenzer  v. 
Wightman,  7  Watts  &  S.  264;  Townsley  v.  Springer,  1 
La.  122;  Bank  of  Natchez  v.  King,  3  Eobinson,  243; 
Brown  v.  Turner,  1  Ala.  752;  Lockwood  v.  Crawford,  IS 
Conn.  361,  363;  Bayley,  Bills,  262;  Story,  Promissory 
Notes,   §  325;  and  Byles,  Bills,   160. 

Some  obscurity  and  uncertainty  have  been  created  on 
this  subject  by  the  expression  used  in  some  of  the  cases, 
and  by  some  of  the  elementary  writers,  that  the  holder  or 
person  giving  the  notice  has  '  one  day  '  or  '  an  entire  day  ' 
in  which  to  give  the  notice  after  the  day  of  the  dishonor. 
The  term  '  one  day  '  or  '  an  entire  day  '  seems  not  to  have 
been  used  always  in  the  same  sense ;  and  the  confusion 
appears  to  have,  in  part,  arisen  from  the  fact  that,  where 
the  parties  reside  in  the  same  place,  notice  at  any  time  be- 
fore the  expiration  of  the  day  after  the  da}^  of  the  default 
will  be  sufficient,  while,  where  the  parties  reside  in  differ- 
ent places,  the  notice  must  frequently  be  mailed  early  in 
the  day  to  be  in  time  for  the  mail  of  that  day. 

The  defendant  in  error  relies  upon  the  doctrine  laid 
down  in  the  elementary  works  of  Chancellor  Kent  and 
Mr.  Justice  Story,  as  fully  sustaining  the  charge  of  the 
court  below.     Inasmuch  as  precision  and  certainty  in  the 


186  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

settlement  of  tliis  rule  are  of  very  great  importance,  a 
careful  examination  of  the  subject  seems  to  be  required. 

Chancellor  Kent,  whose  accuracy  in  his  Commentaries 
on  American  Law  is  never  to  be  questioned  without  grave 
consideration,  in  the  late  editions  of  his  works,  3  Kent's 
Com.  106,  states  the  rule  as  follows:  — 

'  According  to  the  modern  doctrine  the  notice  must  be 
given  by  the  first  direct  and  regular  conveyance.  This 
means  the  first  mail  that  goes  after  the  day  next  to  the 
third  day  of  grace,  so  that,  if  the  third  day  of  grace  be  on 
Thursday,  and  the  drawer  or  indorser  reside  out  of  town, 
the  notice  may,  indeed,  be  sent  on  Thursday,  but  must  be 
put  into  the  post-office  or  mailed  on  Friday,  so  as  to  be 
forwarded  as  soon  as  possible  thereafter.' 

And  in  a  note  by  the  learned  author,  explanatory  of  the 
text,  it  is  said  that  — 

'  The  principle  that  ordinary,  reasonable  diligence  is 
sufficient,  and  that  the  law  does  not  regard  the  fractions 
of  the  day  in  sending  notice,  Avill  sustain  the  rule  as  it  is 
now  generally  and  best  understood  in  England,  and  in  the 
commercial  part  of  the  United  States,  that  notice  put  into 
the  post-office  on  the  next  day  at  any  time  of  the  day,  so 
as  to  be  ready  for  the  first  mail  that  goes  thereafter,  is 
due  notice,  though  it  may  not  be  mailed  in  season  to  go  by 
the  mail  of  the  day  next  after  the  day  of  the  default. ' 

Several  cases  are  cited  by  the  learned  author,  but  they 
do  not  sustain  his  position.  The  case  of  Jackson  v. 
Richards,  2  Caines's  Cases,  343,  referred  to,  is  not  in 
point.  Haynes  v.  "Birks,  3  Bos.  &  Pul.  599,  decides  that 
where  the  note  fell  due  on  Saturday,  the  notice  sent  by  the 
post  on  Monday  was  sufficient.  Sunday  being  excluded 
and  not  taken  into  the  account,  the  notice  was  sent  by  the 
post  of  the  next  legal  day.  In  the  cases  of  Bray  r-.  Had- 
wen,  5  Maule  &  Sel.  68,  and  Wright  v.  Shawcross,  2  Barn. 
&  Aid.  501,  it  was  decided  that  the  notice,  having  arrived 
on  Sunday,  was  to  be  considered  as  having  been  received 
on  Monday,  and  then  the  party  had  till  Tuesday,  the  next 


LAWSON  V.  THE  FARMERS'  BANK  OF  SALEM.        187 

post-day,  for  giving  the  notice.  In  Geill  v.  Jeremy,  1  M.  & 
M.  61,  where  no  mail  went  out  on  the  day  next  after  the 
day  of  the  default,  it  was  held  that  the  requirement  being 
an  impossible  one  on  that  day,  a  notice  sent  by  the  next 
succeeding  mail-day  would  be  in  season.  The  case  of  Firth 
V.  Thrush,  8  Barn.  &  C.  387,  turned  upon  the  question 
whether  the  attorney  employed  to  ascertain  the  residence 
of  the  defendant  should  be  allowed  a  day  to  consult  his 
client  after  information  of  the  defendant's  residence. 
And  Lord  Tenterden  said :  '  If  the  letter  (giving  informa- 
tion of  the  defendant's  residence)  had  been  sent  to  the 
principal,  he  would  have  been  bound  to  give  notice  on  the 
next  day.'  The  only  other  case  referred  to  is  that  of 
Hawkes  v.  Salter,  4  Bing.  715  ;  and  this  is  the  only  one 
which  even  tends  to  sustain  the  position  of  the  learned 
author.  In  that  case,  the  bill  was  dishonored  on  Saturday, 
and  the  mail  left  at  half-past  nine  o'clock  on  Monday 
morning;  and  an  unsuccessful  attempt  was  made  to  prove 
that  the  notice  was  put  into  the  post-ofiice  on  Tuesday 
morning.  Best,  C.  J. ,  expressed  himself  clearly  of  opin- 
ion '  that  it  would  have  been  sufficient  if  the  letter  had 
been  put  into  the  post-office  before  the  mail  started  on  the 
Tuesday  morning;  but  that  there  was  no  sufficient  evi- 
dence that  it  had  been  put  in  even  on  Tuesday  morning.' 
The  opinion  in  this  case  was,  therefore,  a  mere  dictum, 
which  determined  nothing,  the  case  being  decided  upon  a 
different  ground. 

But  the  position  of  Chancellor  Kent,  above  referred  to, 
is  in  direct  conflict  with  the  rule  as  laid  down  by  himself 
in  the  first  edition  of  his  work.  In  the  edition  of  1828,  3 
Kent's  Com.  73,  the  rule  is  stated  in  these  words :  — 

'  According  to  the  modern  doctrine,  the  notice  must  be 
given  by  the  first  direct,  regular  conveyance.  This  means 
the  first  convenient  and  practicable  mail  that  goes  on  the 
day  next  to  the  third  day  of  grace;  so  that,  if  the  third 
day  of  grace  be  on  Thursday,  and  the  drawer  or  indorser 
reside  out  of  town,  the  notice  may,  indeed,  be  sent  on 


188  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

Thursday,  but  must  be  sent  by  the  mail  that  goes  on 
Friday.' 

In  the  hist  edition  of  this  work,  published  in  1851,  the 
editor,  Mr.  William  Kent,  admits  the  weight  of  authority 
to  be  in  favor  of  the  rule  as  laid  down  in  Chick  v.  Pills- 
bury  and  Downs  v.  Planters'  Bank,  above  referred  to,  and 
he  says  that  — 

'  The  opinion  of  Best,  C.  J.,  in  4  Bing.  715,  is  the  only 
one  that  sustains  the  rule  suggested;  and  that  the  observa- 
tions of  Mr.  Justice  Story  were  too  latitudinarian  in  allow- 
ing the  entire  whole  day  next  after  the  dishonor.' 

It  is  true  that  Mr.  Justice  Story,  in  his  work  on  Bills 
of  Exchange,  §  291,  says  that  an  indorser  need  not  give 
notice  to  his  antecedent  indorser  till  twenty-four  hours 
have  elapsed  after  the  receipt  of  his  own  notice  of  the 
dishonor.  And  in  his  note  to  §  290  of  the  same  work,  the 
author  says  that  — 

'  The  rule  does  not  appear  to  be  so  strict  as  it  is  laid 
down  by  Mr.  Chitty,  and  that  it  would  be  more  correct  to 
say  that  the  holder  is  entitled  to  one  whole  day  to  prepare 
his  notice,  and  that,  therefore,  it  will  be  sufficient,  if  he 
sends  it  by  the  next  post  that  goes  after  twenty-four  hours 
from  the  time  of  the  dishonor, '  etc. 

And  he  adds :  '  I  have  seen  no  late  case  which  imports 
a  different  doctrine.  On  the  contrary,  they  appear  to  me 
to  sustain  it;  but,  as  I  do  not  know  of  any  direct  authority 
which  positively  so  decides,  this  remark  is  merely  pro- 
pounded for  the  consideration  of  the  learned  reader. ' 

It  is  not  necessary  here  to  inquire  whether  the  position 
taken  by  the  learned  author  is  in  conflict  with  the  decisions 
made  by  himself  in  1  Mason,  180,  and  2  Story,  416,  above 
referred  to.  In  his  same  work  on  Bills  of  Exchange  he 
has  stated  the  rule  with  great  precision  and  accuracy  in 
the  following  language,  in  §  382:  — 

'  In  all  cases  where  notice  is  required  to  be  given,  it  is 
sufficient,  if  the  notice  is  personal,  that  it  is  given  on  the 
day  succeeding  the  day  of  the  dishonor,  early  enough  for 


LAWSON  V.  THE  FARMERS'  BANK  OF  SALEM.        189 

the  party  to  receive  it  on  that  clay.  If  sent  by  the  mail, 
it  is  sufficient  if  it  is  sent  by  the  mail  of  the  next  day,  or 
the  next  practicable  mail.'  And  in  §  288:  '  If  the  post  or 
mail  leaves  the  next  day  after  the  dishonor,  the  notice 
should  be  sent  by  that  post  or  mail,  if  the  time  of  its  clos- 
ing or  departure  is  not  at  too  early  an  hour  to  disable  the 
holder  from  a  reasonable  performance  of  the  duty.  So 
that  the  rule  may  be  fairly  stated  in  more  general  terms 
to  be,  that  the  notice  is  in  all  cases  to  be  sent  by  the  next 
practical  post  or  mail  after  the  day  of  the  dishonor,  hav- 
ing a  due  reference  to  all  the  circumstances  of  the  case. ' 

The  same  learned  author  has  laid  down  the  rule  very 
fully  to  the  same  effect  in  his  work  on  Promissory  Notes, 
§  324. 

The  statement  of  the  rule  in  the  last  extract  is  consis- 
tent with  the  doctrine  established  by  the  Supreme  Court 
of  the  United  States,  and  fully  sustained  by  authority. 

The  discrepancies  which  have  arisen  on  this  subject 
appear  to  have  grown  out  of  an  inaccurate  use,  in  some  of 
the  books  and  decisions,  of  the  terms  '  his  day, '  '  an  entire 
day,'  and  '  a  whole  day,'  etc.,  these  phrases  being  at  one 
time  vmderstood  or  taken  literally,  and  at  another  time  to 
mean  a  space  of  time  equal  to  a  full  day.  If  these  phrases 
are  to  be  taken  to  mean  the  duration  of  a  full  day,  instead 
of  the  day  itself,  in  their  general  application,  the  effect 
would  be  to  change  and  break  down  numerous  well-settled 
and  useful  rules.  The  law,  as  a  general  thing,  does  not 
have  regard  to  the  fractions  of  a  day,  and  thus  compel 
parties  to  resort  to  nice  questions  of  the  sufficiency  of  a 
certain  number  of  hours  or  minutes,  and  to  the  taking  of 
the  parts  of  two  different  days  to  make  up  what  may  be 
considered  in  one  sense  a  day,  because  equal  in  duration  to 
one  entire  day.  If  this  were  the  case,  the  indorser,  after 
having  been  notified,  would  often  be  unable  to  determine 
whether  he  had  been  notified  in  season  or  net,  until  he  had 
learned  the  hour  of  the  day  when  the  default  occurred; 
and  the  holder  would  have  it  in  his  power  at  times  of 


190  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

affecting  injuriously  the  right  of  the  indorser  to  an  early 
notice,  by  delaying  the  presentment  until  a  late  hour  in 
the  day.  Nothing  more  could  have  been  intended  by  the 
use  of  these  phrases  than  that  each  party  should  have  a 
specified  day  upon  which  the  act  enjoined  upon  him  should 
be  performed.  This  is  the  sense  in  which  Lord  Ellen- 
borough  used  it  in  the  case  of  Smith  v.  Mullett,  2  Camp. 
208,  when  he  said :  '  If  a  party  has  an  entire  day,  he  must 
send  off  his  letter  conveying  the  notice  within  post-time 
of  that  day.'  And,  it  is  said  by  a  learned  elementary 
authority,  '  If  a  party  has  an  entire  day,  he  must  send  off 
his  letter  conveying  the  notice  of  the  dishonor  of  the  bill 
within  post-time  of  that  day.'     Byles,  Bills,  161. 

The  rule  laid  down  in  Smith's  Mercantile  Law,  to  which 
the  defendant  in  error  has  referred,  will  not,  as  I  appre- 
hend, be  found  on  close  examination  to  be  at  variance  with 
the  doctrine  here  adopted.     Smith's  ^Mercantile  Law,  310. 

It  is  claimed,  on  behalf  of  the  plaintiffs  in  error  in  this 
case,  that  the  notice  of  the  dishonor  of  the  bill  should 
have  been  sent  immediately  to  them,  instead  of  being  sent, 
as  it  was  in  the  first  place,  to  the  Bank  of  Salem.  The 
holder  is  not  bound  to  give  notice  of  the  dishonor  to  any 
more  than  his  immediate  indorser  ;  and  each  party  to  a 
bill  has  the  same  time  after  notice  to  himself  for  giving 
notice  to  other  parties  beyond  him  that  was  allowed  to 
the  holder  after  the  default.  Sheldon  v.  Benham,  4  Hill 
(N.  Y.),  129;  Eagle  Bank  v.  Hathaway,  5  Met.  213.  And 
when  a  bill  is  sent  to  an  agent  for  collection,  the  agent  is 
required  simply  to  give  notice  of  the  dishonor  in  due  time 
to  his  principal;  and  the  principal  then  has  the  same  time 
for  giving  notice  to  the  indorsers  after  such  notice  from 
his  agent  as  if  he  had  been  himself  an  indorser,  receiving 
notice  from  a  holder.  Bank  of  the  United  States  v.  Davis, 
2  Hill  (N.  Y.),  452;  Church  v.  Barlow,  9  Pick.  547.  The 
party  in  this  case,  therefore,  was  not  at  fault  by  sending 
the  notice  directly  to  the  Bank  of  Salem,  leaving  that 
bank  to  send  the  notice  to  the  plaintiffs  in  error. 


BANK  OF  UTICA  v.  BEXDER.  191 

Applying  the  rule,  therefore,  which  we  have  adopted  as 
the  correct  one,  to  this  case,  it  was  incumbent  on  the 
plaintiff  below,  in  order  to  be  entitled  to  a  recovery,  to 
show  that  the  notice  of  the  dishonor  of  the  bill  was 
deposited  in  the  post-office  in  Pittsburgh  in  time  to  be 
sent  by  the  mail  of  the  twenty-eighth  day  of  July.  Ten 
minutes  past  nine  o'clock  in  the  morning  was  not  an  un- 
reasonably early  hour,  or  before  a  reasonable  and  convenient 
time  after  the  commencement  of  early  business  hours  of 
the  day.  The  neglect,  therefore,  to  send  the  notice  by 
the  mail  of  the  next  day  after  the  day  of  the  default 
operated  to  discharge  the  plaintiffs  in  error  as  indorsers, 
unless  from  some  other  cause  notice  had  been  dispensed 
with  or  rendered  unnecessary.  And  for  the  charge  of  the 
Court  of  Common  Pleas  to  the  jury  to  the  contrary,  the 
judgment  is  reversed,  and  the  cause  remanded  for  further 
proceedings.  Judgment  of  Common  Fleas  I'eversed. 


BAXK   OF  UTICA   v.   BEXDER. 

Supreme  Court  of  New  York,  October,  1839.     21  Wend.  643. 

Reasonable  diligence  in  endeavoring  to  find  the  place  of  residence  of  an 
indorse!  satisfies  the  law,  so  far. 

Assumpsit  by  the  holder  against  an  indorser  of  a  bill  of 
exchange.  Defence,  that  due  notice  had  not  been  given. 
Verdict  for  the  plaintiff,  under  instructions  that  the  evi- 
dence (stated  in  the  opinion)  was  sufficient  to  charge  the 
defendant ;  to  which  the  defendant  excepted.  JMotion  for 
a  new  trial.     The  facts  appear  in  the  opinion. 

Bkoxson,  J.,  for  the  court.  —  "When  the  facts  are  all 
ascertained,  what  is  reasonable  diligence  is  a  question  of 
law.  '  This  results,'  said  Spencer,  J.,  in  Bryden  v.  Bryden, 
11  Johns.  187,  'from  the  necessity  of  having  some  fixed 
legal  standard,  by  which  men  may  not  only  know  the  law, 


192  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

but  be  protected  by  it.'  Bayley,  Bills,  142,  144,  and  notes. 
The  judge  was  not  requested  to  submit  the  question  of  due 
diligence  to  the  jury;  but,  had  it  been  otherwise,  he  was 
right  in  treating  it  as  a  question  of  law,  there  being  no  dis- 
pute about  the  facts. 

Was  there  reasonable  diligence  in  endeavoring  to  ascer- 
tain the  place  to  which  the  notice  should  be  directed  ?  Not 
knowing  where  the  defendant  lived,  the  plaintiffs  inquired 
of  the  drawer  for  whose  accommodation  the  bill  was  dis- 
counted, and  relying  upon  the  information  given  by  him, 
they  sent  the  notice  to  Chittenango,  when  it  should  have 
been  sent  to  Manlius  or  Hartsville.  This  is  not  like  the 
case  of  the  Catskill  Bank  v.  Stall,  15  Wend.  364,  affirmed  in 
error,  IS  id.  466 ;  for  there  the  person  who  took  the  note  to 
the  bank,  and  gave  the  information  on  which  the  notice  was 
misdirected,  was  the  agent  of  the  indorsers,  and  they  had 
no  right  to  complain  that  credit  had  been  given  to  what  vas,- 
in  effect,  their  own  representation. 

But  I  am  unable  to  distinguish  this  from  the  case  of  the 
Bank  of  Utica  v.  Davidson,  5  Wend.  587.  That  was  an 
action  against  the  indorser  of  a  note  Avhich  had  been  dis- 
counted for  the  accommodation  of  the  maker,  and  the  notice 
of  protest  was  sent  to  Bainbridge,  when  it  should  have  been 
sent  to  Masonville,  where  the  indorser  lived.  The  person 
who  took  the  note  to  the  bank,  and  gave  the  information  on 
which  the  plaintiffs  acted,  was  the  agent  of  the  maker,  and 
it  was  held  that  there  had  been  due  diligence,  and  judgment 
was  rendered  for  the  plaintiffs.  Sutherland,  J.,  mentions 
the  fact  that  the  note  was  dated  at  Bainbridge,  where  the 
notice  was  sent,  and  that  the  indorser  had  but  recently  re- 
moved from  that  place ;  but  the  case  was  put  mainly  on  the 
ground,  that  the  plaintiffs  had  a  right  to  rely  on  the  infor- 
mation given  by  the  agent  of  the  maker  when  the  note  was 
discounted.  In  the  case  at  bar,  notice  was  directed  to  the 
place  Avhere  the  bill  purports  to  have  been  drawn ;  and  the 
only  difference  between  this  and  the  case  of  the  Bank  of 
Utica   V.    Davidson   consists   in  the    single  fact,    that  the 


BANK  OF   UTICA  v.  BENDER.  193 

Indorser  of  this  bill  had  never  lived  at  Chittenango.  That 
does  not,  I  think,  furnish  sufficient  ground  for  a  solid  dis- 
tinction between  the  two  cases. 

How  does  the  question  stand  upon  principle  ?  It  is  not 
absolutely  necessary  that  notice  should  be  brought  home  to 
the  indorser,  nor  even  that  it  should  be  directed  to  the  place 
of  his  residence.  It  is  enough  that  the  holder  of  a  bill  make 
diligent  inquiry  for  the  indorser,  and  acts  upon  the  best 
information  he  is  able  to  procure.  If,  after  doing  so,  the 
notice  fail  to  reach  the  indorser,  the  misfortune  falls  on  him, 
not  on  the  holder.  There  must  be  ordinary  or  reasonable 
diligence,  —  such  as  men  of  business  usually  exercise  when 
their  interest  depends  upon  obtaining  correct  information. 
The  holder  must  act  in  good  faith,  and  not  give  credit  to 
doubtful  intelligence  when  better  could  have  been  obtained. 

Kow,  what  was  done  in  this  case  ?  The  plaintiffs  inquired 
of  Cobb,  the  drawer  of  the  bill,  who  would  of  course  be 
likely  to  know  where  his  accommodation  indorser  lived. 
They  saw  that  the  defendant,  by  lending  his  name,  had 
evinced  his  confidence  in  the  integrity  of  the  drawer ;  and 
so  far  as  appears,  nothing  had  then  occurred  which  should 
have  led  the  plaintiffs,  or  any  prudent  man,  to  distrust  the 
accuracy  of  Cobb's  statements  concerning  any  matter  of  fact 
within  his  knowledge.  He  professed  to  be  able  to  give  the 
desired  information,  and  his  answer  was  unequivocal.  If 
Cobb  was  worthy  of  being  believed,  there  was  no  reason  for 
doubt  that  the  indorser  resided  at  Chittenango.  The  plain- 
tiffs confided  in  this  information,  and  acted  upon  it. 

But  it  is  said  that  Cobb  had  an  interest  in  giving  false 
information  for  the  purpose  of  protecting  his  accommoda- 
tion indorser,  and  consequently  that  the  plaintiffs  should 
not  have  trusted  to  his  statement.  He  certainly  had  no  legal 
interest  in  the  question.  If  the  bill  was  not  accepted  and 
paid  by  the  drawee,  Cobb  as  the  drawer  was  bound  to  pay 
and  take  it  up  from  the  holder;  and  if  the  indorser  was 
charged,  Cobb  was  bound  to  see  him  indemnified.  In  a 
legal  point  of  view,  it  was  wholly  a  matter  of  indifference 

13 


194  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

to  him  whether  notice  of  the  dishonor  of  the  bill  should  be 
brought  home  to  the  indorser  or  not.  Before  anything  can 
be  made  out  of  the  objection,  we  must  say  that  the  plaintiffs 
were  bound  to  suspect  that  Cobb,  when  he  presented  the 
bill,  intended  to  commit  a  fraud ;  that  he  was  obtaining  a 
discount  upon  a  draft  which  he  knew  would  not  be  paid, 
either  by  the  drawee  or  by  himself ;  that  the  money  was  to 
be  lost  to  some  one,  and  that  he  preferred  the  loss  should 
fall  on  the  holder  rather  than  the  indorser ;  and  conse- 
quently, that  he  would  give  false  information  concerning 
the  proper  place  for  directing  notice.  It  is  quite  evident 
that  the  plaintiffs  entertained  no  such  suspicion ;  for,  if 
they  had,  they  would  neither  have  confided  in  the  state- 
ments of  Cobb,  nor  would  they  have  loaned  him  the  money. 
I  think  they  were  not  bound  to  believe  that  a  fraud  was 
intended.  There  was  nothing  in  the  circumstances  of  the 
case  calculated  to  induce  such  a  belief  in  the  mind  of  any 
man  of  ordinary  prudence  and  foresight.  This  was  an 
every  day  business  transaction,  where  men  must  of  neces- 
sity repose  a  reasonable  degree  of  confidence  in  each  other, 
and  no  one  can  be  chargeable  with  a  want  of  diligence  for 
trusting  to  information  which  would  usually  be  deemed 
satisfactory  among  business  men.  If  there  was  any  ground 
whatever  for  suspecting  fraud  on  the  part  of  Cobb,  it  was,  to 
say  the  least,  very  slight,  and  was  fully  counterbalanced  by 
the  fact  that  the  defendant  had  testified  his  confidence  in 
Cobb  by  lending  his  name  as  indorser.  The  plaintiffs  have, 
I  think,  lost  nothing  by  trusting  to  information  derived 
from  the  drawer  of  the  bill,  instead  of  seeking  it  from 
some  other  individual. 

The  case  then  comes  to  this :  The  plaintiffs  applied  for 
information  to  a  man  worthy  of  belief,  and  who  was  likely 
to  know  where  the  indorser  lived.  They  received  such  an 
answer  as  left  no  reasonable  ground  for  doubt  that  Chitte- 
nango  was  the  place  to  which  the  notice  should  be  sent.  I 
think  they  were  not  bound  to  push  the  inquiry  further. 
Men  of  business  usually  act  upon  such  information.     They 


WALKER   V.  STETSON.  195 

buy  and  sell,  and  do  other  things  affecting  their  interest, 
upon  the  credit  which  they  give  to  the  declarations  of  a 
single  individual  concerning  a  particular  fact  of  this  kind 
within  his  knowledge.  This  is  matter  of  common  experi- 
ence. Ordinary  diligence  in  a  case  like  this  can  mean  no 
more  than  that  the  inquiry  shall  be  pursued  until  it  is  satis- 
factorily answered.  This  is  the  only  practical  rule.  If  the 
holder  of  a  bill  is  required  to  go  further,  it  is  impossible  to 
say  where  he  can  safely  stop.  Would  it  be  enough  to 
inquire  of  two,  three,  or  four  individuals,  or  must  he  seek 
intelligence  from  every  man  in  the  place  likely  to  know 
anything  about  the  matter  ?  It  would  be  difficult,  if  not 
impossible,  to  answer  this  question. 

Neiv  trial  denied. 


WALKER  V.    STETSON. 

Supreme  Court  of  Ohio,  December,  1862.     14  Ohio  St.  89. 

The  fact  that  a  drawer  or  indorser  goes  from  the  place  of  his  residence 
to  another  place  to  dispose  of  property,  which  occupies  him  for  several 
weeks  of  time,  does  not  make  such  latter  place  his  place  of  business. 

Action  by  the  holder  against  the  indorser  of  certain  bills 
of  exchange.  Judgment  for  the  plaintiff.  Writ  of  error 
on  instructions  to  the  jury.  The  facts  appear  in  the 
opinion. 

Ranxet,  ,1.,  for  the  court.  — The  bills  of  exchange  upon 
which  this  action  was  brought  were  drawn  and  indorsed 
by  the  plaintiff  in  error.  His  liability  upon  them  was 
conditional,  and  his  obligation  to  pay  them  depended  upon 
their  being  duly  dishonored,  and  legal  notice  of  such  dis- 
honor; unless,  indeed,  he  had  waived  such  diligence  on 
the  part  of  the  holder.  The  bills  were  legally  dishonored 
and  properly  protested,  and  notices  for  all  the  parties  con- 
ditionally liable  were  in  due  time  forwarded  to  the  defend- 
ant in  error,  a  subsequent  indorser  of  the  bills.     The  right 


196  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

to  recover  was  placed  upon  two  grounds:  1.  That  the 
defendant  in  error  had,  on  the  day  he  received  these 
notices,  forwarded  by  mail  those  directed  to  the  plaintiff 
in  error,  to  his  place  of  business  at  Chicago ;  and,  2.  That 
a  few  days  thereafter,  in  a  personal  interview  with  the 
defendant  in  error,  he  had  recognized  his  liability  as  still 
existing,  and  had  expressly  promised  to  pay  the  bills. 
The  verdict  of  the  jury  may  have  been  founded  upon  the 
ground  last  stated,  but,  as  there  was  a  conflict  in  the  evi- 
dence upon  it,  there  is  nothing  in  the  record  to  show  that 
it  was ;  and  we  are,  consequently,  compelled  to  examine 
the  facts  applicable  to  the  first  ground,  and  the  instruc- 
tions of  the  court  based  upon  that  state  of  facts. 

Stating  these  facts  as  broadly  as  anything  in  the  evi- 
dence will  warrant,  they  amounted  to  this:  The  plaintiff 
in  error  was  a  resident  of  Morristown,  New  Jersey,  and 
had  no  fixed  residence  in  the  State  of  Ohio,  or  at  Chicago, 
but  during  most  of  the  season  of  1856  had  been  engaged 
in  the  lumber  business,  staying  at  Cleveland,  and  in 
Ottawa  County,  where  he  owned  a  saw-mill;  that  about 
the  1st  of  November  he  left  Cleveland,  and,  before  doing 
so,  informed  the  defendant  in  error  that  he  was  going  to 
Chicago  to  dispose  of  a  quantity  of  lumber  which  he  was 
about  shipping  to  that  place,  and  should  return  from  there 
to  Cleveland;  and  had  not  returned  when  the  notices  were 
mailed  to  him  at  Chicago  on  the  22d  of  that  month,  — that 
being  the  very  day  upon  which  they  were  received  by  the 
defendant  in  error  from  the  notary  in  New  York.  In 
point  of  fact,  the  plaintifl:  in  error  was  in  Chicago  when 
the  notices  were  mailed  to  him,  but  probably  left  there 
before  they  arrived,  and  shortly  after  was  in  Cleveland, 
where  he  was  met  by  the  defendant  in  error,  and  fully 
informed  of  all  that  had  transpired. 

Upon  this  state  of  the  facts,  counsel  for  the  plaintiff  in 
error  requested  the  court  to  charge  the  jury :  '  That  if  the 
defendant's  residence  was  not  in  Chicago,  or  he  was  not 
engaged  in  any  permanent  business  there,  but  was  there 


WALKER   V.  STETSON.  197 

temporarily,  and  for  a  temporary  purpose  only,  the  send- 
ing to  him,  at  Chicago,  notices  of  the  protest  of  said  bills 
of  exchange  would  not  be,  unless  the  defendant  actually 
received  them,  due  diligence,  and  sufficient  to  charge  the 
defendant  with  the  payment  of  said  bills.' 

To  which  the  court  responded  as  follows :  '  That  if  the 
defendant  did  not  reside  in  Chicago,  and  was  not  engaged 
in  any  permanent  business  there,  but  was  there  for  a  pur- 
pose merely  temporary,  sending  notices  of  protest  to  him 
at  Chicago  would  not,  as  a  proposition  of  law,  constitute 
due  diligence  sufficient  to  charge  the  defendant.  But  if 
the  defendant  had  gone  to  Chicago  on  business  which 
would  detain  him  an  indefinite  period  of  time,  and  might 
occupy  him  there  during  the  remainder  of  the  season  of 
navigation  on  the  lakes,  that  might  be  the  proper  place  to 
send  the  notices  to  him;  and  it  was  a  question  of  fact  for 
the  jury  to  find,  referring  to  all  the  testimony  on  that 
question,  whether  the  business  of  the  defendant  at  Chicago 
was  of  that  character,  or  whether  the  plaintiff  had  suffi- 
cient reason  from  his  information  derived  from  the 
defendant,  or  from  his  own  knowledge  of  the  defendant's 
business,  to  believe  the  defendant  was  at  Chicago  at  the 
time  the  notices  were  sent  by  him,  such  notices  would  be 
due  diligence  on  the  part  of  the  plaintiff,  and  sufficient  to 
charge  the  defendant.' 

If  we  were  permitted  to  treat  the  matter  as  a  question  of 
injury  to  the  plaintiff  in  error,  there  would  be  no  difficulty 
whatever  in  saying  that  he  lost  nothing  by  the  course  pur- 
sued by  the  defendant  in  error,  and  probably  was  actually 
informed  of  the  dishonor  of  the  bills  sooner  than  he  could 
have  been,  if  the  notices  had  been  sent  to  his  residence  in 
New  Jersey.  But  we  are  not  at  liberty  to  take  so  wide  a 
view  of  the  subject.  The  law  has  very  definitely  settled 
what  shall  constitute  due  diligence  in  such  cases,  and 
when  the  facts  are  ascertained,  it  is  the  duty  of  the 
court  to  determine,  as  a  question  of  law,  whether  reason- 
able diligence  has  been  used;  and  it  cannot  be  submitted 


198  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

to  the  jury  as  a  question  of  fact.  Bank  of  Columbia  v. 
Lawrence,  1  Peters,  578;  Bank  of  Utica  v.  Bender,  21 
Wend.  643;  Carroll  v.  Upton,  3  Coinst.  272;  Wheeler  y. 
Field,  6  Met.  290;  Belden  v.  Lamb,  17  Conn.  442;  Lorain 
Bank  of  Elyria  v.  Townsend,  2  Ohio  State,  343.  The 
object  has  been  to  attain  the  greatest  possible  certainty  in 
a  matter  so  vital  to  the  interests  of  the  mercantile  com- 
munity, and  the  equities  of  particular  cases  have  not  been 
allowed  to  interfere  Avith  the  attainment  of  this  object. 
In  this  State,  these  rules  have  been  fully  adopted  and  con- 
stantly enforced,  and,  if  we  saw  reason  now  to  doubt  their 
justice  or  policy,  we  should  find  ourselves  unable  to  change 
them,  without  a  corresponding  change  should  take  place 
in  States  and  countries  with  which  our  commercial  rela- 
tions are  so  extensive  and  important. 

The  parties  in  this  case  not  residing  in  the  same  place, 
there  is  no  doubt  that  it  was  a  proper  case  for  sending  the 
notices  hy  mail,  and  in  such  cases  it  is  well  settled  that 
putting  into  the  .post-office  seasonably  a  notice  properly 
directed  is,  in  itself,  due  diligence,  or  constructive  notice, 
and  will  be  sufficient,  although  it  never  reaches  the  party 
to  whom  it  is  directed.  Woodcock  v.  Houldsworth,  16 
Mees.  &  W.  124;  Dickens  v.  Beal,  10  Peters,  570;  Jones 
V.  Lewis,  8  Watts  &  S.  14.  As  to  the  place  to  which  the 
notice  should  be  directed,  it  is  equally  well  settled  that  it 
should  be  sent  to  the  drawer  or  indorser's  residence  or 
place  of  business,  if  either  is  known  to  the  holder,  or, 
upon  diligent  inquiry,  can  be  ascertained;  and  if  neither 
are  known  nor  can  be  found,  the  law  dispenses  with  any 
notice  whatever.  Bank  of  the  United  States  v.  Carneal, 
2  Peters,  543;  Chitty,  Bills,  486;  Bayley,  Bills,  280. 
But  while  this  is  the  general  principle,  the  spirit  of  the 
rule  certainly  is,  that  the  notice  should  be  sent  to  such 
place  that  it  will  be  most  likely  promptly  to  reach  the 
person  for  whom  it  is  intended;  and  hence,  in  its  apjjlica- 
tion  to  particular  cases,  it  has  often  been  held  that  a  notice 
is  sufficient  if  sent  to  the  post-office  where  the  party  usually 


WALKER  V.  STETSON.  199 

receives  liis  letters,  although  not  that  of  his  residence,  as 
well  as  to  that  Avhere  he  resides ;  and  in  all  cases  the  notice 
may  be  sent  to  the  place  pointed  out  by  the  drawer  or 
indorser,  and  in  general  will  be  sufficient,  both  in  refer- 
ence to  himself  and  parties  who  stand  behind  him  on  the 
bill.  Reid  v.  Payne,  16  Johns.  218;  Bank  of  Geneva  v. 
Hewlett,  4  Wend.  328 ;  Bank  of  United  States  v.  Lane,  3 
Hawks,  453;  Shelton  v.  Braithwaite,  8  Mees.  &  W.  252. 
Indeed,  it  is  suggested  in  the  present  case  that  the  state- 
ment made  by  the  plaintiff  to  the  defendant  in  error  suffi- 
ciently indicated  Chicago  as  the  place  to  which  the  notices 
might  be  sent.  Whatever  of  weight  this  suggestion  may 
properly  have,  it  can  only  be  considered  by  us  when  the 
case  in  the  court  below  appears  to  have  been  decided  upon 
that  ground.  As  yet  this  consideration  has  not  been  passed 
upon  in  that  court. 

How  then,  in  view  of  the  foregoing  principles,  stands 
the  case  before  us  ?  Was  Chicago,  in  the  sense  of  the 
legal  rule,  so  far  the  residence  or  place  of  business  of  the 
party  as  to  make  the  notices  sent  there  constrnctive  notice 
of  the  dishonor  of  the  bills?  A  very  careful  examination 
of  all  the  evidence  now  contained  in  the  record  has  fully 
satisfied  us  that  it  was  not.  Upon  this  point,  there  is  no 
conflict  in  the  evidence.  The  plaintiff  below  says  the 
defendant  informed  him  he  was  going  to  Chicago  '  to  dis- 
pose of  a  quantity  of  lumber,  which  he  was  about  shipping 
to  that  place,  and  should  return  from  there  to  Cleveland ; ' 
that  he  knew  the  defendant  had  been  to  Chicago,  but  did 
not  know  that  he  was  there  when  the  notices  were  mailed, 
and  had  reason  to  believe  he  did  not  receive  them  there, 
as  he  was  soon  afterward  back  to  Cleveland.  The  defend- 
ant says  he  went  to  Chicago,  and  was  there  from  the  1st 
to  the  24th  of  November,  '  disposing  of  a  quantity  of 
lumber,'  and  in  the  afternoon  of  the  day  last  named,  he 
left  Chicago,  and  arrived  at  Cleveland  on  the  morning  of 
the  26th;  that  he  had  no  permanent  business  at  Chicago, 
and  was  there  for  a  temporary  purpose  only,  and  never 
received  the  notices  sent. 


200  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

The  question  is  then  reduced  to  this:  Does  going  to  a 
city  to  dispose  of  property,  which  occupies  the  party  for 
three  weeks  of  time,  without  one  word  of  explanation  as 
to  the  mode  of  doing  the  business,  or  his  relations  to  the 
post-office,  make  such  city  his  place  of  business  within 
the  meaning  of  the  commercial  rule?  If  we  were  to  affirm 
that  it  did,  the  principle  must  have  a  very  wide,  and  as 
we  think  a  very  disastrous,  application  to  a  large  class  of 
business  men,  dealing  more  largely  than  any  other  in  com- 
mercial paper.  The  stock  and  produce  of  the  West  are 
taken  to  the  eastern  cities,  by  persons  engaged  in  that 
business,  to  be  sold;  and  most  western  merchants,  once 
or  twice  in  each  year,  spend  from  a  few  days  to  a  few 
weeks  at  the  same  places,  replenishing  their  stocks  of 
goods.  Did  anybody  ever  suppose  that  these  persons  were 
bound  to  watch  the  post-offices  in  those  cities  for  notices 
of  the  protest  of  their  paper?  We  think  not;  and  yet,  if 
these  notices  are  sufficient,  we  see  no  distinction  to  be 
taken  between  this  case  and  theirs.  It  is  very  certain 
that  no  decided  case  has  given  any  countenance  to  the 
supposition  that  such  a  notice,  not  received  by  the  party, 
would  be  sufficient. 

The  cases  of  Tunstall  v.  Walker,  2  Sm.  &  M.  638,  and 
Chouteau  v.  Webster,  6  'Slet.  1,  have,  perhaps,  gone  to  the 
verge  of  the  law,  but  they  are  very  far  from  reaching  this 
case.  In  each  of  those  cases,  the  defendant  was,  at  the 
time  the  notice  was  forwarded  to  him  at  Washington,  a 
senator  in  Congress,  and  in  actual  attendance  on  that  body. 
The  first  of  these  cases  had  been  before  decided  by  the 
High  Court  of  Errors  and  Appeals,  and  is  reported  in  1 
How.  (Miss.)  259.  Upon  the  then  state  of  the  evidence, 
the  court  held  that  a  notice  sent  to  Washington  Cit}', 
when  the  senator  had  a  residence  in  the  State  which  he 
represented,  would  not  be  sufficient  to  charge  him  as  an 
Indorser;  and  the  reason  assigned  is  that  '  his  absence  was 
but  temporary,  and  the  duration  of  that  absence  uncertain. 
In  case  of  such  absence  from  home,  the  law  presumes  that 


WALKER   V.  STETSON.  201 

some  member  of  the  family  is  still  at  the  residence,  and 
that    communications   will    be   forwarded    to  the   proper 
address.'     But,  upon  a  further  trial  of  the  case,    it  was 
proved   that    the   defendant   had   no   actual    residence   in 
Mississippi,  and  had  left  no  agent  at  his   last  place  of 
abode  to  receive  or  forward  his  letters;  that  from  the  4th 
of  February,  when  the  notice  was  forwarded,  to  the  4th  of 
March   ensuing,   he  was    in   the  actual   discharge   of   his 
official   duties  at  Washington,  and  in  the   daily  habit   of 
receiving  his  letters  at   the  post-office  in  that  city;   and, 
upon  this  state  of  facts,  the  court  held  the  notice  sent  to 
that  city  sufficient.     In  the  case  of  Chouteau  v.  Webster, 
the  defendant  had  left  an  agent  in  Boston  in  charge  of  his 
business,  but  this  was  unknown  to  the  holder  of  the  paper, 
and  upon  an  agreed  statement  of  the  facts  showing  that 
the   notice  was,   in  due  time,  deposited  in  the   post-office 
directed  to  the  defendant  at  Washington,  where  he  was 
then,  and  for  some  time  afterward,   in  attendance  upon  a 
session  of  Congress ;  and  that  all  letters  addressed  to  mem- 
bers were  regularly  and  immediately  taken  from  the  post- 
office   by   officers    of   the    Senate,    and   delivered   to   such 
members,    the   court   held    the    notice   sufficient.      Shaw, 
C.  J.,  after  premising  the  caution  that  the  '  decision  is 
founded  on  the  circumstances  of  the  particular  case,  and 
may  be  varied  by  other  facts, '  proceeds  to  place  it  upon 
the  ground  that,  while   the    defendant's   domicile  was  at 
Boston,   his  'actual  residence'   was  at  Washington,  'to 
which,    for  the  time   being,    he  was  fixed   by  his  public 
duty.'     We   have   no   doubt   of   the   correctness   of   these 
decisions ;  and  no  comment  can  be  necessary  to  distinguish 
them  from  a  case  where  the  part}'-  simply  visits  a  place  for 
a  purpose  clearly  temporary  and  special,  with  no  proof  to 
show  that  he  has  identified  himself  with  its  business,  or 
established  any  relations  with  its  post-office.     Kegarding 
that  as  this  case,  we  are  clearly  of  the  opinion  that  the 
plaintiff  in  error  was  entitled  to  the  instruction  he  asked, 
and  that  the  learned  judge  erred  in  the  qualifications  he 
annexed  to  the  instruction  given. 


202  CASES  ON  BILLS,  NOTES,  AND    CHEQUES. 

If  we  were  entirely  satisfied  of  the  correctness  of  this 
qualification  in  the  abstract,  we  should  still  be  compelled 
to  reverse  the  judgment  for  the  reason  that  there  was  no 
evidence  to  give  any  wider  scope  to  the  inquiry  than  that 
contemplated  in  the  instruction  asked  for.  That  this  was 
an  error  has  been  settled  by  this  court,  and  the  value  of 
jury  trial  will  very  much  depend  upon  the  observance  of 
the  principle.  In  Bain  v.  Wilson,  10  Ohio  State,  16,  the 
instruction  asked  and  given,  as  well  as  the  qualification 
annexed  by  the  court,  were  all  held  to  be  a  correct  exposi- 
tion of  the  law;  and  yet,  as  '  there  was  no  evidence  before 
the  jury  which  required  or  even  authorized  the  qualifica- 
tion annexed  by  the  court,'  the  judgment  was  reversed. 
The  court  say:  '  The  judge  must  confine  himself  in  his 
remarks  to  the  law  and  evidence  of  the  case.  So  far  from 
being  under  any  obligation  to  call  the  attention  of  the  jury 
to  a  conjectural  state  of  facts,  it  would  be  highly  improper 
for  him  to  do  so.'  And  the  reason  for  this  is  very  perti- 
nently stated  in  one  of  the  cases  referred  to :  '  Jurors  are 
constantly  inclined  to  look  to  the  opinion  of  the  judge  for 
instruction  as  to  what  is  and  what  is  not  evidence.  When 
he  tells  them  to  determine  a  given  problem  from  the  evi- 
dence before  them,  they  can  hardly  do  otherwise  than  infer 
that,  in  his  judgment,  there  is  evidence  upon  which  their 
verdict,  when  given,  may  rest.'  Fay  v.  Grimsteed,  10 
Barb.  321. 

But  we  are  very  far  from  being  satisfied  that  the  qualifi- 
cation annexed  in  this  case  does  contain  a  correct  state- 
ment of  the  law.  After  stating  that,  if  the  plaintiff  in 
error  was  in  Chicago  for  a  purpose  merely  temporary,  the 
notices  would  not  be  sufficient,  the  court  proceed  to  say 
that  if  his  business  there  w^as  such  as  would  detain  him 
an  indefinite  time^  and  '  might  occupy  him  there  during 
the  remainder  of  the  season  of  navigation  on  the  lakes,' 
it  might  be  proper  to  send  the  notices  to  that  place.  If 
he  went  there  for  the  special  purpose  stated  in  tlie  evi- 
dence, we  do  not  think  it  would  make  any  difference  that 


WALKER   V.  STETSON.  203 

he  could  uot  tell  precisely  when  he  would  be  able  to  sell 
his  property;  and,  when  it  is  remembered  that  this  was 
in  the  month  of  November,  we  do  not  think  that  a  delay 
in  effecting  his  object  until  the  navigation  should  close 
would  be  in  any  way  decisive.  At  most,  it  would  be  but 
a  circumstance,  entitled  to  its  just  weight  with  others  in 
determining  the  question  whether  Chicago  was  his  place 
of  business,  or  whether  he  was  a  mere  sojourner  there  for 
a  special  and  limited  purpose.  In  the  one  case,  he  might 
be  charged  by  a  notice  sent  to  that  post-office,  because  he 
is  presumed  to  have  established  relations  with  it;  in  the 
other,  no  such  presumption  arises,  and  he  can  be  charged 
only  upon  the  actual  receipt  of  the  notice.  Indeed,  when 
the  whole  instruction  is  taken  together,  it  amounts  to  little 
less  than  a  request  to  the  jury  to  go  beyond  the  uncontra- 
dicted and  legally  insufficient  facts  in  evidence,  and  inquire 
into  the  motives  of  tlie  plaintiff  below;  and  concluding 
with  the  positive  instruction  that,  if  he  had  sufficient  rea- 
son '  to  believe  the  defendant  was  at  Chicago  at  the  time 
the  notices  were  sent,'  they  would  be  sufficient  to  charge 
him. 

Without  perhaps  intending  to  do  so,  it  seems  to  us  that 
the  court  has  incautiously  surrendered  its  rightful  province 
to  judge  of  the  sufficiency  of  the  facts  to  constitute  due 
diligence,  and  has  devolved  that  duty  upon  the  jury.  To 
approve  of  that  would  be  to  abandon  all  that  has  been 
gained  in  the  way  of  certainty,  in  the  determination  of 
questions  of  this  character. 

While  it  is  true  that  the  rules  necessary  to  be  observed 
in  charging  parties  conditionally  liable  upon  negotiable 
paper  are  strict,  and  require  much  care  and  promptitude 
on  the  part  of  the  holder,  yet  they  are  such  as  long  experi- 
ence has  demonstrated  to  be  necessary,  and  a  substantial 
compliance  with  them  lies  at  the  very  foundation  of  the 
contract  into  which  the  drawer  or  indorser  enters.  His 
contract  is  conditional;  and  to  make  it  absolute,  without 
a  fair  performance  of  the  conditions,  would  be  to  make  a 


204  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

contract  for  him,  instead  of  enforcing  the  one  he  has  made 
for  himself. 

The  judgment  must  be  reserved,  and  the  cause  re- 
manded to  the  District  Court  of  Cuyahoga  County  for 
further  proceedings. 


SIGERSON   V.    MATHEWS. 

Supreme  Court  of  the  United  States,  December,  1857.    20  How.  496. 

Promise  to  pay,  by  an  iudorser,  made  before  or,  with  full  knowledge 
of  facts,  after  maturity,  is  a  waiver  of  steps. 

The  case  is  stated  in  the  opinion  of  the  court. 

McLean,  J.,  for  the  court.  — This  is  a  writ  of  error  to 
the  Circuit  Court  for  the  district  of  Missouri. 

An  action  was  brought  by  Mathews  against  John  Sigerson, 
as  indorser  on  a  note  of  James  Sigerson,  now  deceased, 
dated  the  10th  of  March,  1852,  for  the  payment  of  the 
sum  of  $2,000,  two  years  after  date,  at  the  Bank  of  the 
State  of  Missouri,   with  interest  from  the  date. 

It  was  proved  on  the  trial  that  in  1851  Mathews  advanced 
largely  to  John  Sigerson  on  some  transactions  in  pork, 
whereby  Sigerson  became  indebted  to  him  in  the  sum  of 
$2,000;  that  Sigerson  wanted  two  years'  time,  on  which 
Mathews  required  a  mortgage  on  real  estate  as  security; 
but  Sigerson  offered  to  give  the  note  of  his  brother  James, 
indorsed  by  himself,  instead  of  the  mortgage;  and  he 
represented  that  his  brother  James  was  the  owner  of  a 
valuable  real  estate  near  St.  Louis ;  which  offer  was 
accepted,  and  the  note  was  given. 

Some  time  in  the  fall  of  1852,  Joseph  E.  Elder,  a  wit- 
ness, received  the  note  from  Mathews  for  collection,  soon 
after  the  death  of  James  Sigerson,  and  before  the  note 
became  due.  Witness  called  on  John  Sigerson,  and  asked 
him  if  he  should  have  the  note  protested  against  the  estate 
of  James  Sigerson.      He  replied,  that  the  witness  need 


SIGERSON  V.  MATHEWS.  205 

not  do  so,  and  that  the  notes  should  be  paid  at  maturity. 
The  witness  then  placed  the  note  in  his  portfolio,  where 
it  remained  until  after  due.  After  it  was  due,  witness 
called  on  John  Sigerson,  and  informed  him  that  he  had 
neglected  to  put  the  note  in  bank  for  collection,  and  asked 
him  what  he  was  going  to  do.  He  said  he  would  see  wit- 
ness in  a  few  days,  and  arrange  it.  Afterwards  Sigerson 
said  to  the  witness  that  he  did  not  consider  himself  liable 
as  indorser,  as  the  note  had  not  been  protested. 

In  February,  1852,  John  Sigerson  sold  his  interest  in 
the  farm  near  St.  Louis,  which  was  one  half  of  it,  and 
which  contained  about  one  thousand  acres,  to  James 
Sigerson,  who  was  to  pay  off  the  incumbrances  on  the 
land,  which  amounted  to  about  f  16,000.  James  executed 
twenty  notes  for  $2,000  each,  payable  in  six,  twelve,  and 
eighteen  months  ;  and  John  Sigerson  made  him  a  deed. 
In  July,  1852,  James  reconveyed  the  land  to  John,  and 
the  bargain  was  rescinded.  This  was  done  because  James 
had  not  fulfilled  his  contract.  Nineteen  of  the  notes  were 
given  up,  but  the  note  now  in  suit  was  not  surrendered, 
and  for  which  the  account  of  James  was  credited  on  the 
books  of  John.     James,  on  his  decease,  left  no  property. 

On  the  above  facts,  the  court  charged  the  jury,  '  if  they 
believe  from  the  evidence,  that,  before  the  maturity  of 
the  note,  in  conversation  with  the  agent  of  the  plaintiff, 
the  defendant  dispensed  with  a  presentation  of  the  note 
and  demand  of  payment,  and  promised  to  pay  it  or  pro- 
vide for  its  payment  at  maturity,  he  cannot  now  set  up  as 
a  defence  to  this  suit,  that  the  note  was  not  presented  for 
payment,  and  demand  made  therefor,  when  it  was  due, 
and  that  no  notice  of  its  dishonor  was  given;  '  that,  '  if, 
after  the  maturity  of  the  note,  the  defendant  promised  the 
plaintiff  or  his  agent  to  pay  the  same,  having  at  the  time 
of  making  said  promise  knowledge  of  the  fact  that  the  note 
had  not  been  presented  for  payment,  and  that  no  demand 
had  been  made  therefor,  or  notice  of  non-payment  given, 
the  defendant  cannot  now  set  up.  as  a  defence  to  said  note, 


206  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

a  want  of  sucli  demand  or  notice.'  '  If  the  defendant  dis- 
pensed neither  with  the  presentation  of  the  note  and  notice, 
nor  promised  to  pay  the  same,  having  knowledge  as  above 
stated,  the  plaintiff  cannot  recover. ' 

Exception  was  taken  to  these  instructions.  Certain 
instructions  were  asked  by  the  defendant,  which  were 
refused;  but  it  is  unnecessary  to  state  them,  as  they  are 
substantially  embraced  in  those  given  by  the  court. 

As  there  was  no  formal  demand  of  payment,  nor  protest 
for  non-payment  and  notice,  those  requisites  must  have 
been  waived  by  the  defendant,  to  make  him  responsible  as 
indorser;  and  to  this  effect  were  the  instructions  of  the 
court;  and  we  think  the  testimony  not  only  authorized 
the  instructions  given,  but  also  the  verdict  rendered  by 
the  jury.  Before  the  note  was  due,  the  defendant  said  to 
Elder,  the  agent  of  Mathews,  and  who  held  the  note,  that 
he  need  not  take  steps  to  collect  it  from  the  estate  of  his 
brother  James,  as  it  should  be  paid  at  maturity.  This 
was  an  assurance  which  could  not  be  mistaken,  and  it  was 
relied  on  by  the  agent.  He  placed  the  note  in  his  port- 
folio, where  it  remained  until  after  it  became  due.  After 
this,  the  agent  called  on  the  defendant,  and  informed  him 
that  he  had  neglected  to  take  measures  for  the  collection 
of  the  note,  and  asked  him  what  he  was  going  to  do.  He 
answered,  that  in  a  few  days  he  would  see  the  witness, 
and  arrange  it.  This  was  an  unconditional  promise  to  pay 
the  note,  which  no  one  could  misunderstand,  and  which  he 
could  not  repudiate  at  any  subsequent  period. 

A  promise  by  an  indorser  to  pay  a  note  or  bill  dispenses 
with  the  necessity  of  proving  a  demand  on  the  maker  or 
drawer,  or  notice  to  himself.  Pierson  v.  Hooker,  3  Johns. 
68;  Hopkins  v.  Liswell,  12  Mass.  52.  Where  the  drawer 
of  a  protested  bill,  on  being  applied  to  for  payment  on 
behalf  of  the  holder,  acknowledged  the  debt  to  be  due,  and 
promised  to  pay  it,  saying  nothing  about  notice,  it  was 
held  that  the  holder  was  not  bound  to  prove  notice  on  the 
trial.      Walker  v.   Laverty,    6  Munf.   487.      An  uncondi- 


FOSTER   V.  PARKER.  207 

tional  promise  by  the  indorser  of  a  bill  to  pay  it,  or  an 
acknowledgment  of  his  liability,  and  knowledge  of  his 
discharge  by  the  laches  of  the  holder,  Avill  amount  to  an 
implied  waiver  of  due  notice  of  a  demand  of  the  drawee, 
acceptor,  or  maker.  Thornton  v.  Wynn,  12  Wheat.  183; 
Bank  of  Georgetown  v.  Magruder,  7  Peters,  287.  We 
think  the  instructions  of  the  court  were  correct,  and  that 
consequently  the  judgment  must  be 

Affirmed,  ivlth  costs. 

FOSTER   V.   PARKER. 

Common  Pleas  Division,  High  Com-t  of  Justice  of  England, 
November,  1876.     2  C.  P.  D.  18. 

That  an  indorser  of  a  bill  of  exchange  was  not  damnified  by  want  of 
notice  of  dishonor,  does  not  excuse  want  of  notice. 

Action  on  a  bill  of  exchange  by  an  indorsee  against  an 
indorser.  Statement  of  defence,  want  of  notice  of  dis- 
honor. Reply:  That  neither  at  the  time  when  the  bill 
was  drawn,  nor  afterwards,  nor  when  it  became  due  and 
on  presentment  thereof,  had  the  acceptor,  or  the  drawer, 
or  any  indorser  prior  to  the  defendant,  any  effects  of  the 
defendant  in  his  hands,  and  the  said  bill  was  drawn  by 
the  drawer  and  accepted  by  the  acceptor  and  indorsed  by 
the  defendant  and  by  the  prior  indorsers  for  the  purpose 
of  raising  money  for  the  defendant,  the  drawer,  the 
acceptor,  and  the  said  persons  who  indorsed  before  the 
defendant,  jointly;  and  the  defendant  was  in  no  way  dam- 
nified even  if  there  was  no  notice  of  dishonor.  Demurrer 
and  joinder. 

Denmax,  J.  —  I  am  of  opinion  that  our  judgment  should 
be  for  the  defendant.  I  think  the  allegation  in  the  reply, 
that  the  defendant  was  in  no  way  damnified  by  want  of 
notice  of  dishonor,  must  be  treated  as  an  allegation  of  law, 
a  mere  conclusion  from  the  previous  allegations.      Then, 


208  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

are  those  allegations  sufRcient  to  make  the  reply  good? 
In  the  case  of  Biekerdike  v.  Bollman,  1  T.  R.  405,  it  was 
held  that  no  notice  of  dishonor  was  necessary;  but  in  all 
the  subsequent  cases  on  the  subject  it  is  laid  down  that  the 
doctrine  in  that  case  ought  not  to  be  extended;  and  that, 
with  regard  to  an  indorser,  to  excuse  notice  of  dishonor 
facts  must  be  stated  which  show,  not  as  a  mere  possibility 
but  as  an  absolute  certainty,  that  he  could  not  be  damni- 
fied by  the  absence  of  such  notice.  The  facts  alleged  in 
the  reply  only  show  that  the  drawer,  acceptor,  and  prior 
indorsers  of  the  bill  were  jointly  interested  with  the 
defendant  in  some  transactions  for  the  purposes  of  which 
the  amount  of  the  bill  was  to  be  raised.  It  seems  to  me 
that  so  far  from  these  facts  making  out  that  the  defendant 
could  not  be  damnified  by  want  of  notice  of  dishonor,  the 
prima  facie  inference  from  them  is  that  he  would  be.  All 
the  parties  being  interested  jointly,  prima  facie  if  the 
defendant  had  to  pay  the  whole  amount  of  the  bill  he 
would  be  entitled  to  contribution  from  the  other  parties. 
The  authorities  cited  in  argument  all  show  that  the  prin- 
ciple of  Biekerdike  v.  Bollman,  1  T.  R.  405,  cannot  be 
extended  to  the  case  of  an  indorser,  unless  it  is  clearly 
made  out  that  under  no  circumstance  could  he  be  preju- 
diced by  absence  of  notice.  The  allegations  in  the  reply 
do  not  make  this  out. 

LiNDLEY,  J.  —  To  disentitle  the  defendant  as  the  in- 
dorser of  a  bill  of  exchange  to  notice  of  dishonor  the 
plaintiff  must  show  that  it  was  the  defendant's  duty,  as 
between  himself  and  the  other  parties  to  the  bill,  to  pro- 
vide for  it.  It  is  obvious  that  the  court  cannot  come  to 
the  conclusion  that  the  defendant  was,  as  between  himself 
and  the  other  parties  to  this  bill,  bound  to  provide  for  it 
from  the  averments  in  this  reply.  Indeed,  the  prima  facie 
inference  from  them  would  be  that  he  was  not.  The  case 
therefore  does  not  come  within  the  authority  of  the  cases 
in   which   notice   of   dishonor   has   been   excused.      With 


ARNOLD   V.  DRESSER.  209 

regard  to  the  general  allegation  that  the  defendant  was  not 

damnified  by  absence  of  notice  of  dishonor,   it  seems  to 

me  insufficient  as  being  too  vague.     It  might  mean   that 

the  other  parties  to  the  bill  would  not  have  been  able  to 

pay.     He  would  be  damnified  in  the  legal  sense  if  he  had 

a  remedy  over  against  any  of  them  and  was  not  bound,  as 

between  himself  and  them,  to  meet  the  bill.     For   these 

reasons   I   agree   that   our    judgment   should    be    for   the 

defendant. 

Judgment  for  the  defendant.^ 


AENOLD  V.  DRESSER. 
Supreme  Court  of  Massachusetts,  September,  1864.     8  Allen,  435. 

In  order  to  charge  an  indorser  of  a  joint  note,  a  demand  must  be  made 
upon  all  the  promisors  by  some  one  who  has  the  note  with  him  at  the 
time,  unless  special  circumstances  are  shown  to  excuse  its  absence. 

Such  demand  is  not  waived  by  a  promise  by  the  indorser  to  pay  the 
note,  if  at  the  time  of  making  the  promise  he  is  erroneously  informed  by 
the  holder  that  a  due  demand  has  been  made  upon  the  promisors. 

Contract  against  the  indorser  of  a  joint  promissory  note. 

At  the  trial  in  the  Superior  Court,  before  Morton,  J.,  it 
appeared  that  on  the  day  when  the  note  became  due,  Theo- 
dore S.  Stratton,  in  behalf  of  the  plaintiff,  demanded  payment 
thereof  of  the  two  promisors,  but  did  not  have  the  note  in 
his  possession  at  the  time  ;  and  the  note  was  not  paid.  The 
plaintiff  testified  that  on  the  same  day  he  called  upon  the 
defendant,  and  gave  notice  to  him  that  demand  had  been 
made  on  the  makers ;  that  one  of  the  makers  called  during 
the  interview,  and  both  he  and  the  defendant  said  that  the 
note  should  be  paid  soon. 

Upon  this  evidence,  the  judge  ruled  that  the  plaintiff  was 
not  entitled  to  recover,  and  directed  a  verdict  for  the  de- 

1  See  Turner  v.  Samson,  2  Q.  B.  D.  23.  As  to  Bickerdike  v.  Bollman, 
1  T.  R.  405,  cited  supra,  see  Hopkirk  v.  Page,  2  Brock.  20;  L.  C.  Bills  & 
Notes,  96,  97. 

14 


210  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

fendant,  which  was  accordingly  rendered,  and  the  plaintiff 
alleged  exceptions. 

BiGELOw,  C.  J.,  for  the  court.  —  The  defendant  is  not  liable 
as  indorser  of  the  note  declared  on.  In  order  to  charge  him 
it  was  necessary  for  the  plaintiff  to  show  due  presentment 
and  demand  of  the  note  on  both  the  promisors ;  Union  Bank 
of  Weymouth,  &c.  v.  Willis,  8  Met.  504 ;  ^  or  a  waiver  thereof 
by  the  defendant.  There  were  no  such  presentment  and 
demand.  If  a  note  is  made  payable  at  a  particular  place, 
the  holder  must  have  it  at  that  place  on  the  day  of  its 
maturity,  in  order  to  make  due  presentment ;  if  it  is  not 
payable  at  a  designated  place,  the  note  must  be  presented 
to  the  promisor  at  his  usual  place  of  business  or  at  his 
dwelling-house.  But  no  valid  presentment  and  demand  can 
be  made  by  any  person  withovit  having  the  note  in  his  pos- 
session at  the  time,  so  that  the  maker  may  receive  it  in  case 
he  iDays  the  amount  due,  unless  special  circumstances,  such 
as  the  loss  of  the  note  or  its  destruction,  are  shown  to  excuse 
its  absence.  Shaw  v.  Keed,  12  Pick.  132 ;  Freeman  v.  Boyn- 
ton,  7  Mass.  483. 

Nor  was  there  any  waiver  of  due  demand  by  the  defend- 
ant. No  such  waiver  is  made,  where  an  indorser  promises 
to  pay  the  note  in  ignorance  of  the  fact  that  he  has  been 
discharged  by  the  laches  of  the  holder,  in  not  making  due 
demand  of  the  promisor,  or  where  such  promise  is  made 
under  a  misapprehension  or  mistake  of  facts  concerning 
the  due  presentment  and  demand  of  the  note.  Low  v. 
Howard,  11  Cush.  268  ;  Kelley  v.  Brown,  5  Gray,  108.  In 
the  case  at  bar,  the  defendant  made  the  statement  on 
which  the  plaintiff  relies  to  show  a  waiver,  not  only  in 
ignorance  of  the  fact  that  the  note  had  not  been  duly 
demanded  of  one  of  the  promisors,  but  under  a  mistaken 
belief  that  it  had  been  so  demanded,  induced  by  the  false 
statement  to  that  effect  made  to  him  by  the  plaintiff. 

Exceptions  overruled. 
1  Ante,  p.  38. 


LEHMAN   V.  JONES.  211 

LEHMAN  V,  JONES. 
Supreme  Court  of  Pennsylvania,  May,  1841.     1  Watts  &  vS.  126. 

If  the  maker  of  a  promissory  note  absconds  before  the  maturity  of  the 
note,  this  will  excuse  the  holder  from  making  presentment  at  his  last 
place  of  residence. 

Assumpsit  against  Lehman  and  Stroh,  as  indorsers  of  a 
promissory  note. 

It  was  proved  that  Robinson,  the  maker  of  the  note  in 
suit,  had  absconded  to  parts  unknown  and  had  not  re- 
turned. The  objection  was  that  no  demand  was  made 
upon  Robinson,  and  that  the  notice  was  informah 

The  court  below  thus  instructed  the  jury  :  — 

Parsons,  President.  —  The  court  instruct  the  jury,  as  a 
matter  of  Iciw,  if  they  believe  that  Robinson  absconded  in 
December,  1835,  as  testified  to  by  his  mother,  and  did  not 
return  before  the  note  became  due,  nor  since,  it  was  not 
requisite  that  the  holders  of  the  note  should  go  to  Jones- 
town, and  attempt  to  make  a  demand  upon  him  in  order  to 
charge  the  indorsers  ;  provided  the  indorsers  were  cognizant 
of  the  fact  that  the  drawers  had  left  the  State,  of  which 
there  would  seem  to  be  no  doubt,  if  the  testimony  of  Mrs. 
Robinson  is  believed. 

Per  Curiam  ^  —  The  rule  in  Lambert  v.  Oakes  (1  Ld. 
Raym.  llS)  is,  that  the  holder  must  have  demanded,  or 
done  his  endeavor  to  demand,  the  money.  But  the  law  is 
not  so  unreasonable  as  to  require  an  impossibility ;  and 
therefore  it  is  said  (Id.  Anon.  743),  that  where  the  drawee 
of  a  bill  has  absconded  before  the  day  of  payment,  notice 
of  the  fact  is  equivalent  to  notice  of  demand  and  dishonor. 
In  Duncan  v.  McCullough,  4  Serg.  &  Rawle,  480,  the  prin- 
ciple was  recognized  as  being  applicable  to  a  promissory 

1  Gibson,  C.  J.,  Rogers,  Huston,  Kennedy,  Sergeant,  JJ.  • 


212  CASES   ON  BILLS,  KOTES,  AND   CHEQUES. 

note ;  and  it  has  been  established  by  direct  decision  in 
some  of  our  neighboring  States.  It  would  have  been  idle 
for  the  plaintiff  to  demand  payment  at  the  late  residence 
of  Robinson,  the  drawer,  after  he  had  absconded.  Where, 
indeed,  the  drawer  of  a  note  or  the  drawee  of  a  bill  has 
merely  removed  from  the  place  of  his  residence,  indicated 
by  the  bill,  it  is  the  business  of  the  holder  to  inquire  for 
him  and  ascertain  where  he  has  gone,  in  order  that  he 
may  follow  him ;  but  when  he  has  secretly  fled,  an  appli- 
cation at  the  place  would  lead  to  no  information  in  respect 
to  him  ;  and  the  law  requires  nothing  which  is  nugatory. 
The  other  errors  are  either  resolvable  by  this  precedent, 
or  are  plainly  unfounded.  Judgment  affirmed. 


BERKSHIRE  BAXK  v.  JOXES. 

Supreme  Court  of  Massachusetts,  September,  1810.     6  Mass.  524. 

Waiving  notice  by  an  indorser  does  not  excuse  demand ;  but  if  the 
paper  was  payable  at  a  designated  place,  and  the  indorsee  was  ready  to 
receive  payment  at  the  time  and  place,  no  further  demand  is  necessary. 

The  plaintiffs  declare  on  a  promissory  note  made  by  one 
Amasa  Glesen,  on  the  21st  of  October,  1807,  by  which  he 
promised  the  defendant  to  pay  him  or  his  order  $125,  at 
the  Berkshire  Bank,  in  sixty-one  days  ;  and  on  an  indorse- 
ment by  the  defendant,  he  waiving  all  right  to  the  notice, 
to  which,  by  law  or  custom,  he  was  entitled  as  indorser. 
The  plaintiffs  also  allege  a  request  and  refusal  by  Glesen, 
the  maker,  and  also  notice  to  the  defendant. 

The  action  was  tried  before  Sedgwick,  J.,  who  directed  a 
nonsuit,  subject  to  the  opinion  of  the  court,  whether  it  was 
necessary  to  the  support  of  this  action,  that,  previous  to  the 
commencement  thereof,  the  contents  of  the  note  declared  on 
should  have  been  demanded  of  the  promisor. 

Parsoxs,  C.  J.,  for  the  court.  —  The  defendant  has  argued 
that,  although  he  waived  notice  of  a  refusal  of  payment  by 


BERKSHIRE   BANK   v.  JONES.  213 

the  maker,  yet  he  did  not  thereby  dispense  with  a  demand 
upon  him ;  for  he  might  waive  the  notice  from  a  confidence 
that  the  maker  would  pay  the  note  on  demand. 

This  construction  of  the  waiver  we  think  correct ;  and  the 
objection  would  be  conclusive,  if  the  indorsement  had  not 
been  made  to  the  plaintiffs,  at  whose  office  the  note  was  to 
be  demanded  and  paid.  The  note  was  payable  on  a  day  and 
at  a  place  certain  ;  and  the  place  is  the  Berkshire  Bank.  A 
demand  of  payment  need  not  be  made  at  any  other  place ; 
and  if  the  holder  of  the  note  is  at  the  bank  on  the  prescribed 
day,  ready  to  receive  the  money,  if  the  maker  be  there,  it  is 
enough  for  him.  And  if  the  maker  does  not  come  to  the 
bank,  or  direct  the  payment  there,  he  has  broken  his  prom- 
ise ;  and  no  other  notice  to  him  is  necessary. 

In  the  case  at  bar,  as  the  plaintiffs  held  this  note,  we 
must  presume  it  was  in  their  bank,  and  there  it  was  made 
payable.  They  were  not  to  look  up  Glesen,  or  to  demand 
payment  of  him  at  any  other  place.  The  defendant,  b}'  his 
indorsement,  guarantied  that  on  the  day  of  payment  the 
maker  would  be  at  the  bank,  and  pay  the  note ;  and  if  he 
did  not  pay  it  there,  he  agreed  that  he  would  be  answer- 
able in  a  suit  at  law,  without  previous  notice  of  the  default 
of  the  promisor. 

Although  we  are  satisfied  that  the  judge  was  correct  in 
his  construction  of  the  terms  of  the  defendant's  waiver  of 
notice,  considered  in  a  general  view,  yet  we  are  of  opinion 
that,  from  the  special  tenor  of  the  note  declared  on,  the  non- 
suit ought  to  be  set  aside ;  and  if,  on  the  trial,  the  plaintiffs 
can  show  that  on  the  day  of  payment  the  note  was  in  the 
bank,  and  that  the  servants  or  officers  of  the  plaintiffs  were 
there  during  the  usual  bank  hours,  to  receive  payment  and 
give  up  the  note,  they  will  be  entitled  to  recover,  as,  by  the 
terms  of  the  note,  they  were  not  holden  to  demand  payment 
but  at  the  bank,  which  was  impracticable  through  the  de- 
fault of  the  maker  ;  and  by  the  defendant's  waiver  he  cannot 
claim  notice. 


214  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

GRANT   V.   ELLICOTT. 

Supreme  Court  of  New  York,  May,  183L     7  Wend.  227. 

In  an  action  by  an  indorsee  of  a  bill  of  excbange  against  the  acceptor, 
it  is  no  defence  that  the  bill  was  accepted  for  the  accommodation  of  the 
drawer,  and  that  the  indorsee  had  knowledge  of  the  fact  when  he  took  the 
bill. 

Assumpsit  by  indorsee  against  the  acceptor  of  a  bill  of 
exchange.  Plea,  that  the  bill  was  accepted  for  accommo- 
dation of  the  drawer  and  that  the  plaintiff  took  it  with 
knowledge  of  the  fact.     Demurrer  to  the  plea. 

Savage,  C.  J.,  for  the  court.  —  The  defendant  says  he 
ought  not  to  pay  the  bill,  because  no  consideration  passed 
between  him  and  Graham,  and  this  was  known  to  the  plain- 
tiffs ;  that  is,  the  defendant  accepted  the  bill  for  the  accom- 
modation of  the  drawer,  which  the  plaintiffs  knew.  This 
is  no  defence ;  it  was  so  decided  in  Smith  v.  Knox,  3  Esp. 
46.  Lord  Eldon  there  held  that,  where  a  bill  is  given  for 
the  accommodation  of  the  drawer  or  payee,  and  is  sent  into 
the  world,  it  is  no  answer  to  an  action  upon  it  against  the 
acceptor,  that  he  accepted  it  for  the  accommodation  of  the 
drawer  and  that  the  fact  was  known  to  the  holder.  In 
such  case,  the  holder,  if  he  gave  a  bona  fide  consideration 
for  it,  is  entitled  to  recover,  though  he  had  full  knowledge 
of  the  transaction.  In  that  case,  the  plaintiff  produced  no 
proof  but  of  handwriting  of  the  parties  to  the  bill. 

The  case  of  Charles  v.  Marsden,  1  Taunt.  224,  was  very 
like  this  case.  The  action  was  brought  by  the  indorsee 
against  the  acceptor.  The  defendant  pleaded  that  it  was 
accepted  for  the  accommodation  of  the  drawer,  and  without 
any  consideration,  and  that  this  was  known  to  the  plaintiffs 
when  they  took  the  bill,  after  it  was  due.  ]\[ansfield,  C.  J., 
says  :  '  There  is  no  allegation  of  fraud  in  this  plea,  nor  any 
allegation  that  the  plaintiff  did  not  give  a  valuable  consid- 
eration for  this  bill ;  it  must,  therefore,  be  presumed  that 


SMALL  V.  SMITH.  215 

he  did.'  Lawrence,  Justice,  says  :  '  In  the  present  case,  it 
is  to  be  supposed  that  the  party  (drawer)  persuades  a  friend 
to  accept  a  bill  from  him,  because  he  cannot  lend  him  money ; 
would  there  be  any  objection,  if,  with  the  knowledge  of  the 
circumstance  that  this  is  an  accommodation  bill,  some 
person  should  advance  money  upon  it  before  it  was  due  ? 
Then  what  is  the  objection  to  his  furnishing  it  after  it  is 
due  ?  For  there  is  no  reason  why  a  bill  may  not  be  nego- 
tiated after  it  is  due,  unless  there  was  an  agreement  for  the 
purpose  of  restraining  it.' 

I  know  of  no  decision  supporting  this  plea,  and  it  would 
be  extremely  prejudicial  to  commercial  paper  if  it  could  be 
supported.  The  acceptor  in  a  bill  is  considered  in  the  same 
light  as  an  indorser  of  a  promissory  note ;  and  it  is  well 
known  that  much  of  the  paper  discounted  in  our  banks  is 
accommodation  paper,  and  it  never  has  been  supposed  that 
the  indorser  in  such  case  is  not  liable. 

Judgment  for  plaintiffs  on  demurrer,  with  leave  to  amend, 
on  payment  of  costs. 

SMALL  V.  SMITH. 
Supreme  Court  of  New  York,  October,  1845.     1  Denio,  583. 

One  who  purchases  accommodation  paper,  with  knowledge  that  the 
terms  and  conditions  on  which  the  accommodation  was  given  have  been 
violated,  is  not  a  bona  fide  iiolder  as  against  the  party  who  lent  his  name 
for  accommodation. 

Assumpsit  upon  a  negotiable  note,  signed  by  the  defend- 
ant as  surety  for  accommodation  of  the  maker.  Defence, 
fraudulent  diversion,  and  that  the  plaintiff  took  the  note 
with  knowledge.  Verdict  for  the  plaintiff,  upon  instruc- 
tions to  the  jury  to  which  the  defendant  excepted.  Motion 
for  a  new  trial,  for  misdirection.  The  facts  are  detailed 
in  the  opinion. 

Beardsley,  J.,  for  the  court.  —  If  the  evidence  given  on 
the  trial  was  true,  and  that  was  for  the  jury  to  determine, 


216  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

it  is  perfectly  clear  that  the  note  was  delivered  to  the  plaiu- 
tift's  ill  violation  of  the  agreement  upon  which  it  had  been 
indorsed  by  the  defendant.  The  plaintiffs,  therefore,  were 
not  entitled  to  recover,  unless  they  received  it  bona  fide 
and  upon  a  valuable  consideration.  Both  were  necessary. 
It  must  have  been  received  in  good  faith,  without  notice  of 
the  arrangement  on  which  the  indorsement  had  been  made, 
and  the  transfer  must  have  been  upon  what  the  law  regards 
as  a  valuable  consideration.  These  principles  admit  of  no 
dispute  ;  and  although,  upon  some  points  of  commercial  law 
in  close  proximity  to  those  I  have  stated,  discordant  opin- 
ions may  be  found,  Stalker  v.  McDonald,  6  Hill,  93,  Swift 
V.  Tyson,  16  Peters,  1,  there  is  entire  harmony  as  to  those  I 
have  mentioned. 

The  judge  charged  that,  if  the  plaintiffs  received  the  note 
in  payment  and  satisfaction  of  a  debt  due  to  them  from 
Hulburt,  the  maker  of  the  note,  that  was  a  sufficient  consid- 
eration for  its  transfer,  and  they  thereby  became  purchasers 
for  value.  This,  as  a  legal  proposition,  is  not  questioned ; 
but  the  bill  of  exceptions  fails  to  show  any  evidence  to 
which  this  principle  could  be  applied.  There  was  no  proof 
which  tended  to  show  that  the  note  had  been  transferred  in 
extinguishment  of  the  debt  of  Hulburt.  The  judge,  there- 
fore, in  my  view  of  the  case,  erred  in  submitting  that  ques- 
tion to  the  jury. 

But  I  shall  not  dwell  on  this  point,  for  the  case  may  be 
disposed  of  on  the  question  of  good  faith. 

It  appears  by  the  testimony  of  Hulburt  that  he  was  in- 
debted to  the  plaintiffs  in  a  sum  exceeding  the  amount  of 
this  note,  and  that  Small,  one  of  the  plaintiffs,  came  to 
Vienna,  where  Hulburt  resided,  to  secure  payment  of  said 
debt.  Small  proposed  to  Hulburt  to  give  a  note  at  one  year 
with  security,  and  the  defendant,  who  lived  in  another 
county,  was  spoken  of  for  that  purpose.  Small  said  he 
would  take  the  defendant  as  surety,  and  it  was  arranged 
that,  while  Small  was  absent  (as  he  was  going  West  for  a 
few  days),  Hulburt  should  go  to  the  defendant's  residence 


SMALL  V.  SMITH.  217 

in  order  to  obtain  him  as  such  surety.  Pursuant  to  this 
arrangement,  Hulburt  went  to  see  the  defendant,  and  told 
him  what  he  wanted.  At  first  the  defendant  refused  to 
indorse;  but  it  was  finally  agreed  between  them  that  he 
would  indorse  the  note  upon  condition  that  one  Austin,  who 
then  held  a  note  given  by  the  defendant,  should  deposit  the 
same  with  a  third  person,  there  to  remain  until  the  defend- 
ant should  be  discharged  from  said  indorsement.  The  note 
in  question  was  accordingly  signed  by  Hulburt  and  indorsed 
by  the  defendant ;  but  it  was  not  to  be  transferred  to  Small, 
or  used  in  any  manner,  until  the  one  held  by  Austin  had 
been  deposited  under  said  arrangement.  Hulburt  returned 
with  the  note  to  Vienna,  where  Austin  lived,  and  told  him 
of  the  arrangement  under  which  the  indorsement  had  been 
made.  Austin  declined  to  comply  with  that  arrangement ; 
but  Hulburt,  as  he  states,  left  the  note  in  suit  on  Austin's 
table,  and  did  not  see  it  again  until  Small  had  returned  to 
Vienna.  Hulburt  first  saw  Small  after  his  return  at  Aus- 
tin's office,  where,  on  arriving  at  the  office,  according  to  the 
testimony  of  Hulburt,  Small  said  to  him,  '  We  have  fixed 
that  matter,  and  Mr.  Austin  has  let  me  have  the  note.' 
The  witness  then  inquired  of  Austin,  in  Small's  presence, 
in  what  manner  the  note  had  been  turned  out,  and  whether 
the  arrangement  of  the  defendant  had  been  complied  with, 
to  which  Austin  made  no  answer ;  but  Small  said  he  had 
prevailed  on  Mr,  Austin  to  indorse  the  note,  and  he  had  got 
it.  This,  according  to  the  witness  (Hulburt),  was  all  which 
passed  at  that  time.  Another  witness  (Paul),  who  was 
present,  said  the  remark  of  Hulburt  to  Austin  was  that  he 
supposed  he  had  not  turned  out  the  note  without  comply- 
ing with  the  request  of  Mr.  Smith,  the  defendant,  to  which 
Austin  made  no  answer;  but  Small  said  he  had  prevailed 
on  Mr.  Austin  to  indorse  the  note,  and  had  released  j\Ir. 
Smith. 

It  is  not  material  which  of  these  witnesses  was  correct  as 
to  the  form  of  the  remarks  made  at  that  time.  Both  come 
to  the  same  result ;  for  what  was  said,  according  to  the 


218  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

statement  of  either  witness,  was  full  notice  to  Small  that 
the  indorsement  had  been  procured  upon  some  arrangement 
or  condition  which  had  not  been  complied  with.  Here, 
then,  Small  had  actual  notice  that  the  indorsement  was  con- 
ditional ;  and,  if  the  note  was  subsequently  transferred  to 
him,  he  Avould  necessarily  take  it  subject  to  that  condition. 
When  this  notice  was  given,  the  note  was  in  Small's  hands. 
He  had  received  it,  as  he  said,  of  Mr.  Austin.  But  it  cannot 
be  pretended  he  had  received  it  of  Austin  upon  any  consid- 
eration moving  between  them.  Indeed,  the  first  remark  of 
Small  to  Hulburt,  and  all  that  was  said  on  that  occasion, 
goes  to  show  that  whatever  might  have  been  done  by  Austin 
had  been  done  for  Hulburt,  and  not  for  himself,  and  in 
furtherance  of  the  negotiation  which  had  been  commenced 
between  Hulburt  and  SmalL  It  is  not  shown  that  Austin 
had  authority  from  Hulburt  to  transfer  this  note  to  Small 
on  any  terms,  although  it  may  be  inferred  that  he  was 
authorized  to  do  so,  on  complying  with  the  condition  upon 
which  the  defendant's  indorsement  had  been  made.  Small 
did  not  set  up  that  he  had  received  the  note  as  the  property 
of  Austin,  and  the  whole  transaction  shows  he  did  not.  He 
could  not,  therefore,  upon  the  facts  as  disclosed  by  the  wit- 
nesses, pretend  that  he  had  acquired  title  to  the  note  in  any 
manner  before  he  was  apprised  by  Hulburt  that  the  indorse- 
ment was  made  on  a  condition  which  had  not  been  per- 
formed. It  is  more  a  matter  of  inference  than  of  anything 
like  direct  proof,  that  Hulburt  at  any  time  assented  to  the 
transfer  of  the  note  to  Small ;  but  if  he  did  so,  after  notice 
to  Small  of  the  condition  on  which  the  indorsement  had 
been  made,  it  is  plain  that  the  plaintiffs  ought  not  to  re- 
cover, as  the  condition  has  never  been  performed.  If  the 
plaintiffs  claim  as  purchasers  of  the  note  from  Austin,  they 
are  met  by  two  objections  :  first,  Small,  one  of  the  plaintiffs, 
was  aware  that  the  note  belonged  to  Hulburt,  and  not  to 
Austin ;  and,  secondly,  it  is  not  shown  that  the  plaintiffs 
paid  or  advanced  anything  to  Austin,  or  that  any  consid- 
eration passed  between  them  for  the  transfer  of  the  note. 


BELCHER   V.  SMITH.  219 

And  as  to  Hulburt,  if  he  assented  to  the  transfer  of  the 
note  to  Small,  it  was  after  explicit  notice  that  the  indorse- 
ment was  conditional,  as  is  proved  by  the  testimony  of  both 
Paul  and  Hulburt.  Had  the  case  been  put  to  the  jury  upon 
the  point  of  notice,  with  suitable  explanations,  there  is  no 
doubt  what  the  verdict  should  and  would  have  been,  unless 
these  witnesses  were  wholly  discredited.  I  think  the  case 
was  not  so  submitted  to  the  jury,  and  that  it  should  be  sent 
back  for  a  new  trial.  J^eiv  trial  granted. 


BELCHER   V.  SMITH. 

Supreme  Court  of  Massachusetts,  September,  1851.    7  Cush.  482. 

The  payee  of  a  note,  who  signs  his  name  to  these  words  written  on  the 
back  thereof,  '  I  hereby  guaranty  the  within  note,'  is  not  liable  thereon  as 
iudorser. 

This  was  an  action  of  assumpsit  on  a  promissory  note, 
bearing  date  of  January  16,  1850,  and  payable  to  the 
defendant  or  his  order,  on  demand. 

At  the  trial  in  the  Court  of  Common  Pleas,  before  Hoar, 
J.,  the  following  facts  appeared:  The  defendant  on  the 
3d  of  February,  1850,  transferred  this  note  to  Field  & 
Leland,  in  payment  of  a  debt,  and  wrote  his  name  on  the 
back  of  the  note,  with  these  words  over  it :  '  I  hereby 
guaranty  the  within  note. '  Field  &  Leland  subsequently 
transferred  the  note  to  the  plaintiff,  and  indorsed  upon  it, 
over  their  signature,  these  words:  *  For  value  received  pay 
to  Henry  S.  Belcher  at  his  own  risk.'  The  defendant 
objected  that  the  plaintiff  could  not  maintain  an  action  in 
his  own  name,  on  the  defendant's  indorsement ;  that  it 
showed  a  contract  of  guaranty  with  Field  &  Leland,  and 
was  not  negotiable.  But  the  court  ruled  that  although  the 
contract  of  guaranty  wa.s  not  negotiable,  the  effect  of  the 
transfer  of  the  note  from  the  defendant  to  Field  &  Leland 
with  the   indorsement   upon  it,   was  such   as  would   have 


220  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

authorized  Field  &  Leland,  and  would  authorize  the  plain- 
tiff, to  write  over  the  indorsement  the  words  '  pay  to  Field 
&  Leland  or  their  order;  '  and  the  plaintiff  was  permitted 
by  the  court  against  the  objection  of  the  defendant  to  write 
those  words. 

The  plaintiff  having  obtained  a  verdict,  the  defendant 
excepted  to  the  above  ruling. 

Dewey,  J.,  for  the  court.  — The  question  raised  in  the 
present  case,  of  the  riglit  of  the  plaintiff'  to  maintain  an 
action  as  indorsee  of  the  promissory  note  sued  upon,  was 
fully  considered  by  us  and  settled  in  the  recent  case  of 
Tuttle  V.  Bartholomew,  12  ]\[et.  452.  Upon  a  review  of 
the  question,  and  comparison  of  the  coniiicting  decisions 
and  grounds  upon  which  they  were  placed,  the  court  were 
of  opinion  that  where  the  name  of  the  payee  of  the  note 
was  indorsed  on  the  back  of  the  note  in  no  other  form 
than  as  a  signature  to  a  guaranty  fully  written  out  and 
expressed,  leaving  nothing  for  implication,  this  was  not 
such  an  indorsement  as  authorized  a  subsequent  holder  of 
the  note  to  sue  upon  it  as  indorsee.  It  is  true  there  was 
the  further  objection  in  that  case,  that  the  guaranty  was 
signed  not  only  by  the  payee  of  the  note,  but  also  by 
another  person,  and  in  the  form  of  a  joint  guaranty.  But 
irrespective  of  that,  the  court  were  of  opinion  that  the 
plaintiff  could  not  enforce  the  payment  of  the  note  by  a 
suit  in  his  own  name,  as  indorsee.         J^ew  trial  ordered. 


MOSES   V.  LAWRENCE   COUNTY   BANK.  221 

[Copyright,  1893,  by  Banks  &  Brothers.] 

MOSES   V.    LAWRENCE   COUXTY  BANK. 

Supreme  Court  of  the  United  States,  October,  1892.    149  U.  S.  298. 

Guaranty  of  the  payment  of  a  promissory  note  made  thereon  on  a  day 
subsequent  to  the  delivery  of  the  note,  requires  a  distinct  consideration, 
and  in  Alabama  a  distinct  expression  of  the  same  in  writing.  Aliter  if 
note  and  guaranty  are  contemporaneous. 

Action  upon  a  guaranty  of  a  negotiable  promissory  note 
made  by  and  payable  to  the  order  of  Sheffield  Furnace 
Company ;  the  guaranty  being  in  the  following  words 
written  upon  the  note  and  signed:  '  We  hereby  guaranty 
the  payment  of  the  note  at  maturity.'  It  was  alleged  in 
the  complaint  that  the  guaranty  was  made  for  valuable 
consideration  ;  that  the  note  with  the  guaranty  thereon 
was  indorsed  by  the  payee,  for  value,  to  the  order  of  J,  P. 
Witherow,  before  maturity,  and  before  maturity  indorsed 
and  transferred  for  value  by  Witherow  to  the  plaintiff; 
and  that  the  defendants  waived  protest  and  notice. 

The  note  was  made  and  was  payable  in  Alabama,  a 
statute  of  which  provides  that  a  special  agreement  to 
answer  for  the  debt  of  another  is  void  '  unless  such  agree- 
ment or  some  note  or  memorandum  thereof,  expressing  the 
consideration,'  is  in  writing.  The  defendant  pleaded, 
inter  alia:  — 

Fourth.  That  the  guaranty  sued  on  was  a  special  prom- 
ise to  answer  .for  the  debt  of  another,  and  did  not  express 
any  consideration  for  the  promise. 

Fifth.  That  the  note  was  given  by  the  Sheffield  Furnace 
Company  for  a  debt  owing  to  Witherow  before  it  was 
made,  and  was  not  founded  upon  a  consideration  paid  or 
liability  accrued  at  the  time  of  the  making  thereof,  and 
the  guaranty  was  without  any  consideration. 

Eighth.  That  the  Sheffield  Furnace  Company  paid  the 
debt  sued  on  to  Witherow  before  this  action  was  com- 
menced. 


222  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

Twelfth.  That  the  guaranty  sued  on  was  a  special 
promise  to  answer  for  tlie  debt  of  another,  and  did  not 
express  any  consideration  therefor,  and  was  not  executed 
contemporaneously  with,  nor  before  the  negotiation  of, 
the  note  of  which  it  guarantied  the  payment. 

The  plaintiff  demurred  to  the  fourth  and  fifth  pleas, 
because  they  did  not  deny  that  the  defendants  indorsed 
the  guaranty  upon  the  note  contemporaneously  with  its 
execution  and  before  any  negotiation  thereof;  and  also 
demurred  to  these  pleas,  as  well  as  to  the  twelfth  plea, 
because  they  did  not  deny  that  the  defendants  indorsed 
the  guaranty  upon  the  note  before  its  negotiation  to  the 
plaintiff,  and  in  order  to  give  it  credit  and  currency,  nor 
allege  that  the  plaintiff  had  notice  of  any  want  of  consid- 
eration for  the  guaranty. 

To  the  eighth  plea  a  replication  was  filed,  alleging  that 
the  plaintiff  became  the  owner  of  the  note  for  a  valuable 
consideration  before  maturity,  and  that  no  part  thereof  had 
ever  been  paid  to  the  plaintiff  or  to  any  one  authorized  by 
the  plaintiff  to  receive  it.  To  this  replication  the  defend- 
ant demurred. 

The  court  below  sustained  the  demurrers  to  the  pleas, 
and  overruled  tlxe  demurrer  to  the  replication. 

Issue  w^as  then  joined  on  the  eighth  plea  and  the  replica- 
tion thereto ;  and  a  trial  by  jury  was  had  upon  that  issue, 
at  which  the  plaintiff  gave  in  evidence  the  note  with  the 
indorsements  and  the  guaranty  thereon. 

Verdict  for  the  plaintiff,  by  direction  of  the  court. 
Exceptions  and  writ  of  error  taken. 

Mr.  Justice  Gray,  for  the  court.  —  By  the  Statute  of 
Prauds  of  Alabama  a  special  promise  to  answer  for  the 
debt,  default,  or  miscarriage  of  another  is  void  '  unless 
such  agreement,  or  some  note  or  memorandum  thereof, 
expressing  the  consideration  '  is  in  writing  and  subscribed 
by  or  in  behalf  of  the  party  to  be  charged.  Alabama 
Code  of  1887,    §  1732.     The  words   '  value   received, '   or 


MOSES   V.  LAWRENCE   COUNTY   BANK.  223 

acknowledging  the  receipt  of  one  dollar,  sufficiently  express 
a  consideration.  Neal  v.  Smith,  5  Ala.  oG8;  Boiling  v. 
Munchus,   65  Ala.  558. 

Every  negotiable  promissory  note,  even  if  not  purport- 
ing to  be  '  for  value  received,'  imports  a  consideration. 
Mandeville  v.  Welch,  5  Wheat.  277;  Page  v.  Bank  of 
Alexandria,  7  Wheat.  35;  Townsend  v.  Derby,  3  Met. 
363.  And  the  indorsement  of  such  a  note  is  itself  prima 
facie  evidence  of  having  been  made  for  value.  Riddle  v. 
Mandeville,  5  Cranch,  322,  332. 

The  promissory  note  in  the  case  at  bar,  having  been 
made  payable  to  the  maker's  own  order,  first  took  effect  as 
a  contract  upon  its  indorsement  and  delivery  by  the  maker, 
the  Sheffield  Furnace  Company,  to  Witherow,  the  first 
taker.  Lea  v.  Branch  Bank,  8  Porter,  119;  Little  v. 
Eogers,  1  Met.  108;  Hooper  v.  Williams,  2  Exch.  13; 
Brown  v.  DeWinton,   6  C.  B.  336. 

A  guaranty  of  the  payment  of  a  negotiable  promissory 
note,  written  by  a  third  person  upon  the  note  before  its 
delivery,  requires  no  other  consideration  to  support  it, 
and  need  express  none  other  (even  where  the  law  requires 
the  consideration  of  the  guaranty  to  be  expressed  in  writ- 
ing), than  the  consideration  which  the  note  upon  its  face 
implies  to  have  passed  between  the  original  parties. 
Leonardo.  Vredenburgh,  8  Johns.  29;  DeWolf  v.  Rabaud, 
1  Pet.  476,  501,  502;  Nelson  v.  Boynton,  3  Met.  396,  400, 
401;  Bickford  v.  Gibbs,  8  Cush.  154;  Nabb  v.  Koontz,  17 
Md.  283;  Parkhurst  v.  Vail,  73  111.  343. 

The  demurrers  to  the  fourth  and  fifth  pleas  therefore 
were  rightly  sustained. 

But  a  guaranty  written  upon  a  promissory  note  after  the 
note  has  been  delivered  and  taken  effect  as  a  contract 
requires  a  distinct  consideration  to  support  it  ;  and  if  such 
a  guaranty  does  not  express  any  consideration  it  is  void, 
where  the  Statute  of  Frauds,  as  in  Alabama,  requires  the 
consideration  to  be  expressed  in  writing.  Leonard  v. 
Vredenburgh,  and  other  cases  above  cited;  Rigby  v.  Nor- 
wood, 34  Ala.  129. 


224  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

The  demurrer  to  the  twelfth  plea,  therefore,  should  have 
beeu  overruled  and  judgment  rendered  thereon  for  the 
defendant,  unless  the  court  saw  tit  to  permit  the  plaintiff 
to  lile  a  replication  to  that  plea. 

It  was  argued  on  behalf  of  the  original  plaintiff  that  the 
validity  and  effect  of  the  guaranty  must  be  governed  by 
the  general  commercial  law,  without  regard  to  any  statute 
of  Alabama.  But  there  can  be  no  doubt  that  the  Statute 
of  Frauds,  even  as  applied  to  commercial  instruments,  is 
such  a  law  of  the  State  as  has  been  declared  by  Congress 
to  be  a  rule  of  decision  in  the  courts  of  the  United  States. 
Act  of  September  24,  1789,  c.  20,  §  34,  1  Stat.  92;  Rev. 
Stat.  §721;  Mandeville  v.  Eiddle,  1  Crauch,  290,  and  5 
Crauch,  322;  DeWolf  v.  Rabaud,  1  Pet.  476;  Kirkman  v. 
Hamilton,  6  Pet.  20;  Brashear  v.  West,  7  Pet.  608;  Paine 
V.  Central  Vermont  Rd.  118  U.  S.  152,  161. 

It  was  also  contended  that  the  order  sustaining  the 
demurrer,  if  erroneous,  did  not  prejudice  the  defendant, 
because  he  might  have  availed  himself  of  the  defence  of 
the  Statute  of  Frauds  under  the  general  issue.  That 
might  have  been  true  if  he  had  pleaded  the  general  issue. 
Kannady  v.  Lambert,  37  Ala.  57;  Pollak  v.  Brush  Electric 
Assoc.  128  U.  S.  446.  But  he  did  not  plead  it,  and  had 
the  right  to  rely  on  his  special  pleas  only,  Alabama 
Code,  §  2675. 

The  suggestion  of  counsel  that,  by  the  practice  in  Ala- 
bama, the  entry  of  an  appearance  of  counsel  for  the 
defendant  was  equivalent  to  filing  a  plea  of  the  general 
issue,  is  too  novel  to  be  accepted  without  proof,  and  seems 
inconsistent  with  Grigg  t\  Gilmer,  54  Ala.  425.  If  the 
record  did  not  show  what  the  pleadings  were,  it  might  be 
presumed  that  the  general  issue  was  pleaded.  ^lay  v. 
Sharp,  49  Ala.  140;  Hatchett  v.  .Molton,  76  Ala.  410.  But 
in  this  case  twelve  pleas  are  set  forth  in  the  record,  and  it. 
cannot  be  assumed  that  there  was  any  other. 

The  eighth  plea  was  payment.  The  defendant  intro- 
duced no  evidence  to  support  this  plea,  and  has  therefore 


PETTEE   V.  PROUT.  225 

no  ground  of  exception  to  the  rulings  and  instructions  at 
the  trial  of  the  issue  joined  thereon. 

But  the  erroneous  ruling  on  the  demurrer  to  the  twelfth 
plea  requires  the  judgment  to  be  reversed  and  the  case 
remanded  to  the  Circuit  Court  for  further  proceedings  in 
conformity  with  this  opinion. 


PETTEE   V.   PEOUT. 

Supreme  Court  of  Massachusetts,  September,  1855.     3  Gray,  502. 

Production  of  a  note  payable  to  A,  or  bearer,  is  sufficient  evideuce  of 
the  holder's  title,  though  he  is  the  general  agent  of  A,  who,  the  answer 
alleges,  is  the  owner  of  the  note. 

One  to  whom  a  note  payable  to  A,  or  bearer,  is  transferred  before 
maturity,  takes  it  subject  to  no  rights  of  set-off  which  the  maker  might 
have  against  A. 

Action  of  contract  on  a  promissory  note  for  $50,  dated 
March  14,  1851,  signed  by  the  defendant,  and  payable  in 
one  year  to  the  Cheshire  Iron  Works,  or  bearer,  with  inter- 
est. The  defendant,  in  his  answer,  denied  that  the  plain- 
tiff was  the  owner  and  bearer  of  the  note  sued  upon,  and 
alleged  that  it  was  the  property  of  the  Cheshire  Iron  Works ; 
and  also  filed  a  declaration  in  set-off  upon  the  following 
note:  '  $49.74.  Cheshire,  June  11,1851.  Six  months  after 
date  we  promise  to  pay  to  the  order  of  Gilman  Bowker, 
forty -nine  dollars  -^^q,  value  received,  ten  dollars  of  which 
is  to  be  paid  in  goods,  with  interest. 

'  Cheshire  Iron  Works,  by  S.  Pettee,  General  Agent.' 
The  case  was  submitted  to  the  court  upon  a  statement  of 
facts,  in  which  it  was  agreed  that  the  plaintiff  was  the 
general  agent  of  the  Cheshire  Iron  Works;  that  the  two 
notes  were  duly  executed  on  the  days  of  their  respective 
dates ;  that  the  note  in  set-off  was  assigned  by  the  holder 
thereof  to  the  defendant,  for  a  valuable  consideration,  with 
the  intention  of  securing  a  debt  against  the  Cheshire  Iron 
Works;  that  the  Cheshire  Iron  Works  was  insolvent,  and 

15 


226  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

had  no  property;  and  that  the  stockholders,  of  whom  the 
plaintiff  was  one,  were  individually  liable  for  their  debts. 

There  being  no  evidence  to  whom  the  note  sued  upon 
belonged,  beyond  the  note  itself,  the  defendant  contended 
that  the  plaintiff  had  not  proved  his  title  to  the  note;  and 
further  contended  that  if  he  had,  the  note  for  $49.74 
should  be  allowed  in  set-off. 

Shaw,  C.  J.,  for  the  court. — The  plaintiff  brings  his 
action,  as  bearer  of  a  note  made  by  the  defendant  to  the 
Cheshire  Iron  Works,  or  bearer.  He  therefore  claims  as 
the  holder  of  a  negotiable  promissory  note,  payable  on 
time,  and  not  dishonored;  and  if  he  establishes  this  title 
by  proof,  he  is  entitled  to  the  same  privileges  and  immuni- 
ties as  an  indorsee  having  taken  a  note  by  indorsement  in 
the  course  of  business,  before  it  has  become  due.  He  is 
not  subject  to  any  equities  as  between  the  promisor  and 
the  original  payee,  nor  to  the  set-off  of  any  debt,  legal  or 
equitable,  which  the  promisor  may  afterwards  acquire. 
Wheeler  v.  Guild,  20  Pick.  545.  By  giving  a  note  payable 
to  bearer  at  a  future  day,  which  is  strictly  a  negotiable 
note,  the  defendant  agreed  to  pay  the  amount  to  any  per- 
son to  whom  it  should  be  transferred,  before  the  day  of 
payment,  without  claiming  to  set  off  any  demand  which 
he  then  had  or  might  have  against  the  promisee.  It  is  in 
this  respect  like  mercantile  notes  (in  use,  we  believe,  in 
some  of  the  States  where  the  law  allows  set-offs  and  other 
equitable  defences,  even  against  indorsees  of  promissorj'' 
notes),  payable  '  without  defalcation,'  thereby  meaning, 
by  force  of  the  contract  itself,  to  bind  the  maker  to  pay 
the  amount  absolutely  to  the  regular  holder,  and  renounc- 
ing any  benefit  of  set-off  or  other  equitable  defence  against 
the  payee. 

Then  the  question  is  as  to  the  proof.  Where  a  plain- 
tiff brings  the  note  declared  upon  in  his  hand,  and  offers 
it  in  evidence,  this  is  not  only  evidence  that  he  is  the 
bearer,  but  also  raises  a  presumption  of  fact  that  he  is  the 


BUR  SON  I'.  HUNTINGTON.  227 

owner;  and  this  will  stand  as  proof  of  title,  until  other 
evidence  is  produced  to  control  it.  Ordinarily,  such 
bearer,  relying  on  the  general  presumption,  has  no  means 
of  proving  the  transfer  of  the  note  to  himself. 

The  defendant  contends  that,  as  the  plaintiff  was  the 
general  agent  of  the  corporation  to  whom  the  note  was 
payable,  and,  as  such,  had  the  custody  of  all  their  notes, 
his  possession  may  have  been  the  possession  of  the  cor- 
poration. But  we  think  this  fact  alone  is  not  sufficient  to 
rebut  the  general  presumption. 

The  demand  relied  on  by  the  defendant  is  a  note  signed 
by  the  Cheshire  Iron  Works,  payees  of  the  note  in  suit, 
and  payable  to  order;  still  it  was  not  negotiable ,  because 
payable  in  part  in  goods.  A  negotiable  note  must  be  pay- 
able in  money.  But  though  the  defendant  could  not  sue 
on  this  note  in  his  own  name,  yet  we  believe  by  the  Eev. 
Sts.  c.  96,  §  5,  as  the  assignee  of  a  chose  in  action,  the 
holder  of  such  note  might  use  it  as  a  set-off,  in  a  proper 
ease,  as  against  a  suit  brought  by  the  debtor,  in  the  same 
manner  as  if  it  were  a  legal  debt.  But  it  is  unnecessary 
further  to  remark  on  the  validity  of  the  set-off;  the  ground 
of  our  decision  is,  that  the  plaintiff  held  the  note  in  suit 
under  such  a  title  that  no  demand  of  the  defendant,  legal 
or  equitable,  against  the  Cheshire  Iron  Works  could  avail 
him  as  a  set-off.  Judgment  for  the  xilaintijf. 


BUESON  V.  HUI^TINGTON. 

Supreme  Court  of  Michigan,  October,  1870.     21  Mich.  415. 

A  negotiable  iustrument  has  no  legal  existence  until  it  has  been  de- 
livered ;  that,  too,  even  in  the  hands  of  a  bona  fide  purchaser  for  value. 

Assumpsit  against  the  defendant  as  maker  of  a  negotiable 
promissory  note,  payable  to  the  order  of  A.  K  Goldwood, 
and  by  him  indorsed  to  the  plaintiff  for  value,  and,  as  cer- 
tain disputed  evidence  tended  to  show,  in  good  faith,  with- 


228  CASES  ON  BILLS,  NOTES,  AND   CHEQLTES. 

out  notice  of  the  facts  set  up  in  defence.  The  note  was 
made  in  negotiations  with  Goldwood  for  the  purchase  by 
the  maker  of  an  interest  in  a  patent  right. 

The  defendant  made  affidavit  denying  the  delivery  of  the 
note/  affirming  therein  that  the  instrument  sued  upon  '  was 
never  delivered  by  this  defendant  to  the  said  A.  N.  Gold- 
wood,  mentioned  in  said  written  instrument,  nor  to  any 
other  person  for  the  said  A.  N.  Goldwood,  or  any  other 
person,  and  that  this  defendant  never  authorized  any  other 
person  to  deliver  the  written  instrument  for  him  this  de- 
fendant to  the  said  A.  N.  Goldwood,  or  to  any  other  per- 
son ;  .  .  .  that  said  written  instrument  was  taken  from  the 
house  of  this  defendant,  in  this  defendant's  absence  from 
the  same,  by  the  said  A.  N.  Goldwood,  without  the  knowl- 
edge or  consent  of  the  deponent  at  the  time.'  There  was 
evidence  tending  to  support  this,  for  which  see  the  opinion. 

Counsel  for  the  defendant  asked  for  the  following  charge, 
in  substance,  to  the  jury :  If  they  find  that  A.  X.  Gold- 
wood,  the  payee,  took  this  note  after  it  was  drawn  and 
signed  by  the  defendant  without  the  knowledge  and  against 
the  will  and  consent  of  the  defendant,  and  before  the  de- 
fendant had  delivered  the  note  to  any  person,  the  note  thus 
obtained  would  be  void  in  the  hands  of  Goldwood,  and  in 
the  hands  of  any  subsequent  holder  deriving  possession 
from  him,  whether  for  value  or  not ;  and  that  the  note,  if 
not  delivered  by  the  defendant  or  by  his  authority,  had  no 
legal  existence,  and  was  therefore  void. 

The  court  declined  to  charge  as  thus  requested,  and  un- 
der the  charge  given  the  jury  found  for  the  plaintiff.  Writ 
of  error  by  the  defendant.  [Facts  foreign  to  the  present 
purpose  are  omitted.] 

Cheistiaxct,  J.,  for  the  court.  —         .... 

But  this  note  was  indorsed  by  Goldwood,  the  payee,  to 
the  plaintiff,  before  maturity,  for  a  valuable  consideration, 
and,  as  plaintiff  claims,  in  good  faith  and  without  notice 

1  Uuder  statute  relating  to  denial  of  execution  on  oath. 


BURSON  V.  HUNTINGTON.  229 

of  a  want  of  delivery  or  of  consideration,  or  any  other  cir- 
cumstance tending  to  invalidate  it  in  the  hands  of  Gold- 
wood;  and  his  evidence  tended  to  show  this,  though  there 
was  evidence  of  some  circumstances  tending  to  show  that 
he  had  notice  of  the  circumstances  under  which  the  paper 
had  been  obtained. 

There  was  also  evidence  on  the  part  of  the  defendant 
strongly  tending  to  show  that  the  note  never  was  delivered 
by  the  defendant,  but  that  Goldwood,  to  whose  order  it  was 
drawn,  was  endeavoring  to  sell  to  the  defendant  a  patent 
right,  or  the  right  of  certain  territory  under  it,  and  that  the 
parties  had  so  far  progressed  towards  the  making  of  an 
arrangement  to  this  end  that  it  was  understood  and  ver- 
bally agreed  that  Goldwood  was  to  give  him  a  deed  of  cer- 
tain territory  upon  defendant's  executing  to  him  a  note  for 
the  amount,  with  some  other  person  signing  it  as  surety, 
^hat  the  parties  being  in  the  defendant's  house,  and  the 
defendant's  sister  being  present,  Goldwood  wrote  this  note 
and  defendant  signed  it;  but  as  a  surety  was  to  be  ob- 
tained, he  laid  the  note  on  the  table  and  went  out  to  find 
his  uncle  for  that  purpose,  telling  Goldwood,  as  he  went  out, 
not  to  touch  it  till  he  came  back ;  but  that  while  defend- 
ant was  gone  Goldwood  picked  up  the  paper  and  started  out 
doors  with  it ;  that  defendant's  sister  then  told  him  to  let 
the  note  be  on  the  table  till  defendant  should  come  back,  to 
which  Goldwood  replied  he  was  going  to  have  the  note,  and 
went  off  with  it,  without  giving  any  deed  of  territory  or 
anything  else  for  it.  That  the  note,  at  tliis  time,  was  not 
stamped,^  and  defendant  never  stamped  or  authorized  it  to 
be  stamped  ;  that  some  four  days  after,  Goldwood  wrote  to 
defendant  requesting  him  to  come  immediately  to  Kalama- 
zoo '  and  sign  stamp  on  the  note,'  and  saying  if  defendant 
was  not  there  by  Tuesday  evening, '  I  shall  consider  that  you 
refuse  your  signature,  and  shall  act  accordingly.'  The  evi- 
dence also  tended  to  show  that  defendant  called  upon  Gold- 
wood  about  that  time,  while  the  latter  had  the  note,  and 

^  As  was  required  at  that  time  b\-  act  of  Congress. 


230  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

demanded  it,  accusing  him  of  stealing  it,  to  which  Gold- 
wood  replied,  'Never  mind,  we  can  fix  that  up,'  and  said  he 
was  ready  to  do  as  he  had  agreed,  and  wanted  defendant  to 
get  another  signer  and  he  would  give  him  a  deed  of  terri- 
tory ;  but  defendant  said  he  did  not  want  the  deed,  but 
wanted  the  note.  Goldwood  refused  to  return  the  note,  or 
to  give  a  deed  till  he  got  another  signer. 

These  facts,  if  found  by  the  jury,  would  show,  not  only 
that  the  note  was  never  delivered  to  the  payee,  and  that  it 
therefore  never  had  a  legal  existence  as  a  note  between  the 
original  parties,  but  that  there  was  yet  no  completed  or 
binding  agreement  of  any  kiiid,  and  was  not  to  be  until  de- 
fendant should  choose  to  get  a  surety  on  the  note  and  the 
payee  should  give  him  a  deed  of  territory'.  Until  thus  com- 
pleted, the  defendant  had  a  right  to  retract. 

As  a  general  rule  a  negotiable  promissory  note,  like  any 
other  written  contract,  has  no  legal  inception  or  valid  exis- 
tence, as  such,  until  it  has  been  delivered  in  accordance 
with  the  purpose  and  intent  of  the  parties.  See  Edwards 
on  B.  and  N.  175,  and  authorities  cited,  and  1  Pars,  on  B. 
and  N.  48  and  49,  and  cases  cited ;  and  see  Thomas  v.  Wat- 
kins,  16  Wis.  549 ;  Mahon  v.  Sawyer,  18  Ind.  73  ;  Carter  v. 
McClintock,  29  Mo.  464.  Delivery  is  an  essential  part  of 
the  making  or  execution  of  the  note,  and  it  takes  effect  only 
from  delivery  (for  most  purposes) ;  and  if  this  be  subse- 
quent to  the  date,  it  takes  effect  from  the  delivery  and  not 
from  the  date.  1  Pars,  ubi  supra.  This  is  certainly  true 
as  between  the  original  parties. 

But  negotiable  paper  differs  from  ordinary  written  con- 
tracts in  this  respect,  that  even  a  wrongful  holder,  between 
whom  and  the  maker  or  indorser  the  note  or  indorsement 
would  not  be  valid,  may  yet  transfer  to  an  innocent  party, 
who  takes  it  in  good  faith,  without  notice,  and  for  value,  a 
good  title  as  against  the  maker  or  indorser.  And  the  ques- 
tion in  the  present  case  is,  how  far  this  principle  will  dis- 
pense with  delivery  by  the  maker. 

When  a  note  payable  to  bearer,  which  has  once  become 


BURSON  V.  HUNTINGTON.  231 

operative  by  delivery,  has  been  lost  or  stolen  from  the 
owner,  and  has  subsequently  come  to  the  hands  of  a  bona 
fide  holder  for  value,  the  latter  may  recover  against  the 
maker  and  all  indorsers  on  the  paper  when  in  the  hands  of 
the  loser ;  and  the  loser  must  sustain  the  loss.  In  such  a 
case  there  was  a  complete  legal  instrument ;  the  maker  is 
clearly  liable  to  pay  it  to  some  one,  and  the  question  is  onl}' 
to  whom.  But  in  the  case  before  us,  where  the  note  had 
never  been  delivered,  and  therefore  had  no  legal  inception 
or  existence  as  a  note,  the  question  is  whether  he  is  liable 
to  pay  at  all,  even  to  an  innocent  holder  for  value. 

The  wrongful  act  of  a  thief  or  a  trespasser  may  deprive 
the  holder  of  his  property  in  a  note  which  has  once  become 
a  note,  or  property,  by  delivery,  and  may  transfer  the  title 
to  an  innocent  purchaser  for  value.  But  a  note  in  tlie 
hands  of  the  maker  before  delivery  is  not  property,  nor  the 
subject  of  ownership,  as  such;  it  is,  in  law,  but  a  blank 
piece  of  paper.  Can  the  theft  or  wrongful  seizure  of  this 
paper  create  a  valid  contract  on  the  part  of  the  maker 
against  his  will,  where  none  existed  before  ?  There  is  no 
principle  of  the  law  of  contracts  upon  which  this  can  be 
done,  unless  the  facts  of  the  case  are  such  that,  in  justice 
and  fairness,  as  between  the  maker  and  the  innocent  holder, 
the  maker  ought  to  be  estopped  to  deny  the  making  and 
delivery  of  the  note. 

But  it  is  urged  that  this  case  falls  within  the  general 
principle,  which  has  become  a  maxim  of  law,  that  when 
one  of  two  innocent  persons  must  suffer  by  the  acts  of  a 
third,  he  who  has  enabled  such  third  person  to  occasion 
the  loss  must  sustain  it.^  This  is  a  principle  of  manifest 
justice  when  confined  within  its  proper  limits.  But  the 
principle,  as  a  rule,  has  many  exceptions;  and  the  point 
of  difficulty  in  its  application  consists  in  determining  what 
acts  or  conduct  of  the  party  sought  to  be  charged  can 
properly  be  said  to  have  '  enabled  the  third  person  to  occa- 
sion the  loss,'  within  the  meaning  of  the  rule.     If  I  leave 

i  See  Bills  and  Notes  (Students'  Series),  pp.  178,  179,  180. 


232  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

my  horse  in  the  stable  or  in  the  pasture,  I  cannot  properly 
be  said  to  have  enabled  the  thief  to  steal  him,  within  the 
meaning  of  this  rule,  because  he  found  it  possible  to  steal 
him  from  that  particular  locality.  And  upon  examination 
it  will  be  found  that  this  rule  or  maxim  is  mainly  confined 
to  cases  where  the  party  who  is  made  to  suffer  the  loss 
has  reposed  a  confidence  in  the  third  person  whose  acts 
have  occasioned  the  loss,  or  in  some  other  intermediate 
person  whose  acts  or  negligence  have  enabled  such  third 
person  to  occasion  the  loss ;  ^  and  that  the  party  has  been 
held  responsible  for  the  acts  of  those  in  whom  he  had 
trusted  upon  grounds  analogous  to  those  which  govern  the 
relation  of  principal  and  agent;  that  the  party  thus  repos- 
ing confidence  in  another  with  respect  to  transactions  by 
which  the  rights  of  others  may  be  affected,  has,  as  to  the 
persons  to  be  thus  affected,  constituted  the  third  person 
his  agent  in  some  sense,  and  having  held  him  out  as  such, 
or  trusted  him  with  papers  or  indicia  of  ownership  which 
have  enabled  him  to  appear  to  others  as  principal,  as 
owner,  or  as  possessed  of  certain  powers,  the  person  repos- 
ing this  confidence  is,  as  to  those  who  have  been  deceived 
into  parting  with  property  or  incurring  obligations  on  the 
faith  of  such  appearances,  to  be  held  to  the  same  extent  as 
if  the  fact  had  accorded  with  such  appearances. 

Hence,  to  confine  ourselves  to  the  question  of  delivery, 
the  authorities  in  reference  to  lost  or  stolen  notes  which 
have  become  operative  by  delivery,  have  no  bearing  upon 
the  question.  If  the  maker  or  indorser,  before  delivery  to 
the  payee,  leave  the  note  in  the  hands  of  a  third  person  as 
an  escrow,  to  be  delivered  upon  certain  conditions  only,  or 
voluntarily  deliver  it  to  the  payee,  or  (if  payable  to  bearer) 
to  any  other  person  for  a  special  purpose  only,  as  to  be 
taken  to  or  discounted  by  a  particular  bank,  or  to  be  car- 
ried to  any  particular  place  or  person,  or  to  be  used  only 
in  a  certain  way,  or  upon  certain  conditions  not  apparent 
upon  the  face  of  the  paper,  and  the  person  to  whom  it  is 

1  See  Bills  and  Notes  (Students'  Series),  pp.  175,  176,  191,  192. 


BURSON   V.  HUNTINGTON.  238 

thus  intrusted  violate  the  confidence  reposed  in  him  and 
put  the  note  into  circulation  ;  this,  though  not  a  valid 
delivery  as  to  the  original  parties,  must,  as  between  a  bona 
fide  holder  for  value  and  the  maker  or  indorser,  be  treated 
as  a  delivery,  rendering  the  note  or  indorsement  valid  in 
the  hands  of  such  bona  fide  holder  ;  or  if  the  note  be  sent 
by  mail  and  get  into  the  wrong  hands,  as  the  party 
intended  to  deliver  to  some  one,  and  selects  his  own  mode 
of  delivery,  he  must  be  responsible  for  the  result.  These 
principles  are  too  well  settled  to  call  for  the  citation  of 
authorities,  and  manifestly  it  will  make  no  difference  in 
this  respect  if  the  note  or  indorsement  were  signed  in 
blank,  if  the  maker  or  indorser  part  with  the  possession 
or  authorize  a  clerk  or  agent  to  do  so,  and  it  is  done.  1 
Parsons  on  Bills  and  Notes,  109-114,  and  cases  cited, 
especially  Putnam  v.  Sullivan,  4  Mass.  45,  which  was 
decided  expressly  upon  the  ground  of  the  confidence 
reposed  in  the  third  person,  as  to  the  filling  up,  and  in  the 
clerks  as  to  the  delivery. 

And  when  the  maker  or  indorser  has  himself  been 
deceived  by  the  fraudulent  acts  or  representations  of  the 
payee  or  others,  and  thereby  induced  to  deliver  or  part 
with  the  note  or  indorsement,  and  the  same  is  thus  fraud- 
ulently obtained  from  him,  he  must  doubtless,  as  between 
him  and  an  innocent  holder  for  value,  bear  the  conse- 
quences of  his  own  credulity  and  want  of  caution.  He 
has  placed  a  confidence  in  another,  and  by  putting  the 
papers  into  his  hands  has  enabled  him  to  appear  as  the 
owner  and  to  deceive  others.  Cases  of  this  kind  are  num- 
erous; but  they  have  no  bearing  upon  the  wrongful  taking 
from  the  maker  when  he  never  voluntarily  parted  with 
the  instrument.  ^luch  confusion,  however,  has  arisen  from 
the  general  language  used  in  the  books,  and  sometimes  by 
judges,  in  reference  to  cases  where  the  maker  has  volun- 
tarily parted  with  the  possession,  though  induced  to  do  so 
by  fraud;  where  it  is  laid  down  as  a  general  rule  that  it 
is  no  defence  for  a  maker,  as  against  a  bona  fide  holder, 


234  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

to  show  that  the  note  was  wrongfully  or  fraudulently 
obtained,  without  attempting  to  distinguish  between  cases 
Avhere  the  maker  has  actually  and  voluntarily  parted  with 
the  possession  of  the  note,  and  those  where  he  has  not. 

We  do  not  assert  that  the  general  rule  we  are  discuss- 
ing —  that  'where  one  of  two  innocent  parties  must  suffer,' 
etc.  — must  be  confined  exclusively  to  cases  where  a  confi- 
dence has  been  placed  in  some  other  person  (in  reference  to 
delivery)  and  abused.  There  may  be  cases  where  culpable 
.negligence  or  recklessness  of  the  maker  in  allowing  an 
undelivered  note  to  get  into  circulation  might  justly  estop 
him  from  setting  up  non-delivery ;  as  if  he  were  knowingly 
to  throw  it  into  the  street,  or  otherwise  leave  it  accessible 
to  the  public,  with  no  person  present  to  guard  against  its 
abduction  under  circumstances  when  he  might  reasonably 
apprehend  that  it  would  be  likely  to  be  taken. ^ 

Upon  this  principle  the  case  of  Ingham  v.  Primrose,  7 
C.  B.  N.  S.  82,  was  decided,  where  the  acceptor  tore  the 
bill  into  halves  (with  the  intention  of  cancelling  it)  and 
threw  it  into  the  street,  and  the  drawer  picked  them  up  in 
his  presence  and  afterwards  pasted  the  two  pieces  together 
and  put  them  into  circulation.  See  also  by  analogy 
Foster  V.  Mackinnon,  L.  K.  4  C.  P.  704.2  -q^^  ^j^g  ^^^gg 
before  us  is  one  of  a  very  different  character,  — no  actual 
delivery  by  the  maker  to  any  one  for  any  purpose. 

The  evidence  tends  to  show  that  when  he  left  the  room 
in  his  own  house,  the  note  being  on  the  table,  and  his 
sister  remaining  there,  he  did  not  confide  it  to  the  custody 
of  the  payee,  but  told  him  not  to  take  it,  and  no  final 
agreement  between  them  had  yet  been  made  and  no  con- 
sideration given.  Under  such  circumstances  he  can  no 
more  be  said  to  have  trusted  it  to  the  payee's  custody  or 
confidence  than  that  he  trusted  his  spoons  or  other  house- 
hold goods  to  his  custody  or  confidence ;  and  there  was  no 
more  apparent  reason  to  suppose  he  would  take  and  carry 
off  the  one  than  the  other. 

1  See  Bills  and  Notes  (Students'  Series),  pjD.  176,  177.  2  p^gt^  237. 


BURSON  V.  HUNTINGTON.  235 

The  maker  therefore  cannot  be  held  responsible  for  any 
negligence;  there  was  nothing  to  prove  negligence,  unless 
he  was  bound  to  suspect  and  treat  as  a  knave,  a  thief,  or  a 
criminal  the  man  who  came  to  his  house  apparently  on 
business,  because  he  afterwards  proved  himself  to  be  such. 
This,  we  think,  would  be  preposterous.  We  therefore  see 
no  ground  upon  which  the  defendant  could  be  held  liable 
on  a  note  thus  obtained,  even  to  a  bona  fide  holder  for 
value.  He  was  guilty  of  no  more  negligence  than  the 
plaintiff  who  took  the  paper,  and  the  plaintiff  shows  no 
right  or  equities  superior  to  those  of  the  defendant. 

Such,  Ave  think,  must  be  the  result  upon  principle.  We 
have  carefully  examined  the  cases,  English  and  American, 
and  are  satisfied  there  is  no  adjudged  case  in  the  English 
courts,  so  far  as  their  reports  have  reached  us,  which 
would  warrant  a  recovery  in  the  present  case.  Some  dicta 
may  be  found  the  general  language  of  which  might  sustain 
the  liability  of  the  maker;  such  as  that  of  Alderson,  B.,  in 
Marston  v.  Allen,  8  Mees.  &  W.  494,  cited  by  Duer,  J., 
in  Gould  v.  Segee,  5  Duer,  260,  and  that  used  by  Williams, 
J.,  in  Ingham  v.  Primrose,  7  C.  B.  n.  s.  82.  But  a  refer- 
ence to  the  cases  will  show  that  no  such  question  was 
involved,  and  that  these  remarks  were  wholly  outside  of 
the  case.  On  the  other  hand  Hall  v.  Wilson,  16  Barb. 
548,  555,  and  556,  contains  a  dictum  fully  sustaining  the 
views  we  have  taken. 

There  are,  however,  two  recent  American  cases  where  the 
note  or  indorsement  was  obtained  without  deliver}^  under 
circumstances  quite  as  wrongful  as  those  in  the  present 
case,  in  one  of  which  the  maker,  and  in  the  other  the 
indorser,  was  held  liable  to  a  bona  fide  holder  for  value. 
Shipley  v.  Carroll,  45  111.  285  (case  of  maker),  and  Gould 
V.  Segee,  5  Duer,  260.  But  in  neither  of  these  cases  can 
we  discover  that  the  court  discussed  or  considered  the  real 
principle  involved;  and  we  have  been  unable  to  discover 
anything  in  the  cases  cited  by  the  court  to  warrant  the 
decision.  It  is  possible  that  the  case  in  Illinois  may 
depend  somewhat  upon  their  statute,  and  the  note  being 


236  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

made  as  a  mere  matter  of  amusement,  and  the  making  not 
being  justified  by  any  legitimate  pending  business,  the 
maker  might  perhaps  justly  be  held  responsible  for  a 
higher  degree  of  diligence,  and  therefore  more  justly 
chargeable  with  negligence  under  the  particular  circum- 
stances, than  the  maker  in  the  present  case. 

There  is  another  case  (Worcester  Co.  Bank  v.  Dorchester 
and  Milton  Bank,  10  Cush.  488)  where  bankbills  were  stolen 
from  the  vault  of  the  bank,  which  though  signed  and  ready 
for  use,  had  never  yet  been  issued,  and  on  which  a  bona 
fide  holder  for  value  was  held  entitled  to  recover.  This, 
we  are  inclined  to  think,  was  correct.  The  court  intimated 
a  doubt  whether  the  same  rule  should  apply  to  bankbills  as 
to  ordinary  promissory  notes,  and  as  to  the  latter  failed 
to  make  any  distinction  between  the  question  of  delivery 
and  questions  affecting  the  rights  of  the  parties  upon  notes 
which  have  become  effectual  by  delivery.  But  we  think 
bankbills,  which  circulate  universally  as  cash,  passing 
from  hand  to  hand  perhaps  a  hundred  times  a  day,  with- 
out such  inquiries  as  are  usual  in  the  cases  of  ordinary 
promissory  notes  of  individuals,  stand  upon  quite  different 
grounds.  And  considering  the  temptations  to  burglars' 
and  robbers,  and  the  much  greater  facility  of  passing  them 
off  to  innocent  parties  without  detection  and  identification 
of  the  bills  or  the  parties,  and  that  the  si^ecial  business  of 
banks  is  dealing  in  and  holding  the  custody  of  monej'  and 
bank-bills,  it  is  not  unreasonable  to  hold  them  to  a  much 
higher  degree  of  care,  and  to  make  them  absolutely  respon- 
sible for  their  safe  keeping.  We  do  not  therefore  regard 
this  case  as  having  any  material  bearing  upon  the  case 
before  us. 

We  think  the  Circuit  Court  erred  in  refusing  to  charge 
upon  this  point  as  requested  by  the  defendant  below. 

[Concerning  want  of  stamp  and  '  other  minor  questions  ' 
not  considered]. 

The  judgment  must  be  reversed  with  costs,  and  a 

New  trial  aivarded. 


FOSTER  V.  MACKINNON.  237 

FOSTER  V.    MACKINNON. 

Common  Pleas  of  England,  July,  1869.     L.  R.  4  C.  P.  704. 

No  liability  is  incurred  by  a  person's  indorsing  paper  upon  the  fraudu- 
lent representation  that  the  writing  on  the  opposite  side  is  a  guaranty  now 
renewed  for  one  previously  made  by  the  same  person,  in  the  absence  of 
negligence  by  him  in  so  indorsing. 

Action  by  indorsee  against  inclorser  on  a  bill  of  exchange 
for  £3,000,  drawn  on  the  6th  of  November,  1867,  by  one 
Cooper  upon  and  accepted  by  one  Callow,  payable  six 
months  after  date,  and  indorsed  successively  by  Cooper, 
the  defendant,  J.  P.  Parker,  T.  A.  Pooley  &  Co.,  and  A. 
G.  Pooley,  to  the  plaintiff,  who  became  the  holder  for 
value  (having  taken  it  in  part-payment  of  a  debt  due  to 
him  from  A.  G.  Pooley)  before  it  became  due,  and  without 
notice  of  any  fraud. 

The  pleas  traversed  the  several  indorsements,  and  alleged 
that  the  defendant's  indorsement  was  obtained  from  him 
by  fraud. 

The  cause  was  tried  before  Bovill,  C.  J.,  at  the  last 
spring  assizes  at  Guildford.  The  defendant,  who  was  a 
gentleman  far  advanced  in  years,  swore  that  the  indorse- 
ment was  not  in  his  handwriting,  and  that  he  had  never 
accepted  nor  indorsed  a  bill  of  exchange;  but  there  was 
evidence  that  the  signature  was  his ;  and  Callow,  who  was 
called  as  a  witness  for  the  plaintiff,  stated  that  he  saw  the 
defendant  write  the  indorsement  under  the  following  cir- 
cumstances: Callow  had  been  secretary  to  a  company 
engaged  in  the  formation  of  a  railway  at  Sandgate,  in 
Kent,  in  which  the  defendant  (who  had  property  in  the 
neighborhood)  was  interested;  and  the  defendant  had  some 
time  previously,  at  Callow's  request,  signed  a  guaranty  for 
£3,000,  in  order  to  enable  the  company  to  obtain  an 
advance  of  money  from  their  bankers.  Callow  took  the 
bill  in  question  (which  was  drawn  and  indorsed  by  Cooper) 
to  the  defendant,  and  asked  him  to  put  his  name  on  it. 


238  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

telling  him  it  was  a  guarant}^;  whereupon  the  defendant, 
in  the  belief  that  he  was  signing  a  guaranty  similar  to  that 
which  he  had  before  given  (and  out  of  which  no  liability 
had  resulted  to  him),  put  his  signature  on  the  back  of 
the  bill,  immediately  after  that  of  Cooper.  Callow  only 
showed  the  defendant  the  back  of  the  paper;  it  was,  how- 
ever, in  the  ordinary  shape  of  a  bill  of  exchange,  and  bore 
a  stamp,  the  impress  of  which  was  visible  through  the 
paper. 

The  Lord  Chief  Justice  told  the  jury  that,  if  the  indorse- 
ment was  not  the  signature  of  the  defendant,  or  if,  being 
his  signature,  it  was  obtained  upon  a  fraudulent  represen- 
tation that  it  was  a  guaranty,  and  the  defendant  signed  it 
without  knowing  that  it  was  a  bill,  and  under  the  belief 
that  it  was  a  guaranty,  and  if  the  defendant  was  not  guilty 
of  any  negligence  in  so  signing  the  paper,  he  was  entitled 
to  the  verdict. 

The  jury  returned  a  verdict  for  the  defendant.  Rule 
nisi  for  a  new  trial. 

In  the  course  of  the  argument  of  Sir  J.  D.  Coleridge, 
Solicitor  General,  in  favor  of  the  rule,  the  following  was 
said:  [Brett,  J.  Nance  v.  Lary  (5  Ala.  370,  cited  in  Par- 
sons on  Bills,  114)  seems  to  be  very  much  to  the  purpose. 
In  that  case,  the  defendant  and  one  Langford  being  about 
to  execute  a  bond  in  blank,  the  latter  produced  a  sheet  of 
paper,  upon  which  the  defendant  signed  his  name ;  where- 
upon Langford  suggested  that  the  signature  was  so  far 
from  the  bottom  of  the  paper  that  there  might  not  be  room 
for  the  bond  to  be  written  above  it,  and  produced  another 
sheet  for  the  defendant  to  sign  so  as  to  leave  sufficient 
room  for  the  intended  bond.  Langford,  with  apparent 
carelessness,  slipped  the  first  sheet  aside,  and  signed  the 
other  with  the  defendant,  who  carried  it  to  the  clerk  of 
the  court  to  be  filled  up,  leaving  the  former  with  Lang- 
ford, under  the  impression  that  it  had  been  or  would  be 
destroyed.  Subsequently,  Langford  caused  the  note  upon 
which  the  present  suit  was  brought  to  be  written  over  the 


FOSTER   V.  MACKINNON.  239 

blank  signature  of  the  defendant  retained  by  him,  and 
negotiated  it  to  the  plaintiff.  Collier,  C.  J.,  said:  'The 
making  of  the  note  by  Langford  was  not  a  mere  fraud  upon 
the  defendant;  it  was  something  more.  It  was  quite  as 
much  a  forgery  as  if  he  had  found  the  blank,  or  purloined 
it  from  the  defendant's  possession.  If  a  recovery  were 
allowed  upon  such  a  state  of  facts,  then  every  one  who 
indulges  in  the  idle  habit  of  writing  his  name  for  mere 
pastime,  or  leaves  sufficient  space  between  a  letter  and  his 
subscription,  might  be  made  a  bankrupt  by  having  prom- 
ises to  pay  money  written  over  his  signature.  Such  a 
decision  would  be  alarming  to  the  community,  has  no 
warrant  in  law,  and  cannot  receive  our  sanction.'] 

The  Solicitor-General  then  citing  Swan  v.  North  British 
Australasian  Co.,  2  H.  &  C.  at  p.  184,  that  'honest  acqui- 
sition confers  title,'  [Byles,  J.  If  that  be  right,  it  can 
only  be  with  reference  to  the  case  of  a  complete  instru- 
ment ;  it  can  hardly  be  applicable  to  a  case  where  a  man's 
signature  has  been  obtained  hy  a  fraudulent  representation 
to  a  document  which  he  never  intended  to  sign.] 

Cur.  adv.  viUt. 

Byles,  J. ,  for  the  court.  —  This  was  an  action  by  the 
plaintiff  as  indorsee  of  a  bill  of  exchange  for  £3.000 
against  the  defendant  as  indorser.  The  defendant  by  one 
of  his  pleas  traversed  the  indorsement,  and  by  another 
alleged  that  the  defendant's  indorsement  was  obtained 
from  him  by  fraud.  The  plaintiff  was  a  holder  for  value 
before  maturity,  and  without  notice  of  any  fraud. 

There  was  contradictory  evidence  as  to  whether  the 
indorsement  was  the  defendant's  signature  at  all  ;  but, 
according  to  the  evidence  of  one  Callow,  the  acceptor  of 
the  bill,  who  was  called  as  a  witness  for  the  plaintiff,  he, 
Callow,  produced  the  bill  to  the  defendant,  a  gentleman 
advanced  in  life,  for  him  to  put  his  signature  on  the  back, 
after  that  of  one  Cooper,  who  was  payee  of  the  bill  and 
first  indorser,  Callow  not  sajnng   that  it  was  a  bill,  and 


240  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

telling  the  defendant  that  the  instrument  was  a  guaranty. 
The  defendant  did  not  see  the  face  of  the  bill  at  all.  But 
the  bill  was  of  the  usual  shape,  and  bore  a  stamp,  the 
impress  of  which  stamp  was  visible  at  the  back  of  the  bill. 
The  defendant  signed  his  name  after  Cooper's,  he,  the 
defendant  (as  the  witness  stated),  believing  the  document 
to  be  a  guaranty  only. 

The  Lord  Chief  Justice  told  the  jury  that,  if  the  indorse- 
ment was  not  the  defendant's  signature,  or  if,  being  his 
signature,  it  was  obtained  upon  a  fraudulent  representa- 
tion that  it  was  a  guaranty,  and  the  defendant  signed  it 
without  knowing  that  it  was  a  bill,  and  under  the  belief 
that  it  was  a  guaranty,  and  if  the  defendant  was  not  guilty 
of  any  negligence  in  so  signing  the  paper,  the  defendant 
was  entitled  to  the  verdict.  The  jury  found  for  the 
defendant. 

A  rule  nisi  was  obtained  for  a  new  trial:  first,  on  the 
ground  of  misdirection  in  the  latter  part  of  the  summing 
up;  and,  secondly,  on  the  ground  that  the  verdict  was 
against  the  evidence. 

As  to  the  first  branch  of  the  rule,  it  seems  to  us  that 
the  question  arises  on  the  traverse  of  the  indorsement. 
The  case  presented  by  the  defendant  is,  that  he  never 
made  the  contract  declared  on ;  that  he  never  saw  the  face 
of  the  bill;  that  the  purport  of  the  contract  was  fraudu- 
lently raisdescribed  to  him;  that,  when  he  signed  one 
thing,  he  was  told  and  believed  that  he  was  signing  another 
and  an  entirely  different  thing;  and  that  his  mind  never 
went  with  his  act. 

It  seems  plain,  on  principle  and  on  authority,  that,  if  a 
blind  man,  or  a  man  who  cannot  read,  or  who  for  some 
reason  (not  implying  negligence)  forbears  to  read,  has  a 
written  contract  falsely  read  over  to  him,  the  reader  mis- 
reading to  such  a  degree  that  the  written  contract  is  of  a 
nature  altogether  different  from  the  contract  pretended  to 
be  read  from  the  paper  which  the  blind  or  illiterate  man 
afterwards  signs;  then,  at  least  if  there  be  no  negligence, 


FOSTER  V.  MACKINNON.  241 

the  signature  so  obtained  is  of  no  force.  And  it  is  invalid 
not  merely  on  the  ground  of  fraud,  where  fraud  exists,  but 
on  the  ground  that  the  mind  of  the  signer  did  not  accom- 
pany the  signature;  in  other  words,  that  he  never  intended 
to  sign,  and  therefore  in  contemplation  of  law  never  did 
sign,  the  contract  to  which  his  name  is  appended. 

The  authorities  appear  to  us  to  support  this  view  of  the 
law.  In  Thoroughgood's  Case,  2  Co.  Rep.  9  b,  it  was  held 
that,  if  an  illiterate  man  have  a  deed  falsely  read  over  to 
him,  and  he  then  seals  and  delivers  the  parchment,  that 
parchment  is  nevertheless  not  his  deed.  In  a  note  to 
Thoroughgood's  Case,  2  Co.  Eep.  9  b,  in  Fraser's  edition 
of  Coke's  Reports,  it  is  suggested  that  the  doctrine  is  not 
confined  to  the  condition  of  an  illiterate  grantor;  and  a 
case  in  Keilwey's  Reports  (Keilw.  70,  pi.  6)  is  cited  in 
support  of  this  observation.  On  reference  to  that  case,  it 
appears  that  one  of  the  judges  did  there  observe  that  it 
made  no  difference  whether  the  grantor  were  lettered  or 
unlettered.  That,  however,  was  a  case  where  the  grantee 
himself  was  the  defrauding  party.  But  the  position  that 
if  a  grantor  or  covenantor  be  deceived  or  misled  as  to  the 
actual  contents  of  the  deed,  the  deed  does  not  bind  him,  is 
supported  by  many  authorities:  see  Com.  Dig.  Fait,  B. 
2;  and  is  recognized  by  Bay  ley,  B.,  and  the  Court  of 
Exchequer,  in  the  case  of  Edwards  v.  Brown,  1  C.  &  J. 
312.  Accordingly,  it  has  recently  been  decided  in  the 
Exchequer  Chamber  that,  if  a  deed  be  delivered,  and  a 
blank  left  therein  be  afterwards  improperly  filled  up  (at 
least  if  that  be  done  without  the  grantor's  negligence),  it 
is  not  the  deed  of  the  grantor.  Swan  v.  North  British 
Australasian  Land  Company,  2  H.  &  C.  175. 

These  cases  apply  to  deeds ;  but  the  principle  is  equally 
applicable  to  other  written  contracts.  Nevertheless,  this 
principle,  when  applied  to  negotiable  instruments,  must  be 
and  is  limited  in  its  application.  These  instruments  are 
not  only  assignable,  but  they  form  part  of  the  currency  of 
the  country.    A  qualification  of  the  general  rule  is  necessary 

16 


242  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

to  protect  innocent  transferees  for  value.  If,  therefore,  a 
man  write  his  name  across  the  back  of  a  blank  bill-stamp, 
and  part  with  it,  and  the  paper  is  afterwards  improperly 
filled  up,  he  is  liable  as  indorser.  If  he  write  it  across  the 
face  of  the  bill,  he  is  liable  as  acceptor,  when  the  instrument 
has  once  passed  into  the  hands  of  an  innocent  indorsee  for 
value  before  maturity,  and  liable  to  the  extent  of  any  sum 
which  the  stamp  will  cover. 

In  these  cases,  however,  the  party  signing  knows  what 
he  is  doing:  the  indorser  intended  to  indorse,  and  the 
acceptor  intended  to  accept,  a  bill  of  exchange  to  be  there- 
after filled  up,  leaving  the  amount,  the  date,  the  maturity, 
and  the  other  parties  to  the  bill  undetermined. 

But,  in  the  case  now  under  consideration,  the  defendant, 
according  to  the  evidence,  if  believed,  and  the  finding  of 
the  jury,  never  intended  to  indorse  a  bill  of  exchange  at 
all,  but  intended  to  sign  a  contract  of  an  entirely  different 
nature.  It  was  not  his  design,  and,  if  he  were  guilty  of 
no  negligence,  it  was  not  even  his  fault,  that  the  instru- 
ment he  signed  turned  out  to  be  a  bill  of  exchange.  It 
was  as  if  he  had  written  his  name  on  a  sheet  of  paper  for 
the  purpose  of  franking  a  letter,  or  in  a  lady's  album,  or 
on  an  order  for  admission  to  the  Temple  Church,  or  on  the 
fly-leaf  of  a  book,  and  there  had  already  been,  without  his 
knowledge,  a  bill  of  exchange  or  a  promissory  note  payable 
to  order  inscribed  on  the  other  side  of  the  paper.  To 
make  the  case  clearer,  suppose  the  bill  or  note  on  the  other 
side  of  the  paper  in  each  of  these  cases  to  be  written  at  a 
time  subsequent  to  the  signature ;  then  the  fraudulent  mis- 
application of  that  genuine  signature  to  a  different  purpose 
would  have  been  a  counterfeit  alteration  of  a  writing  with 
intent  to  defraud,  and  would  therefore  have  amounted  to  a 
forgery.  In  that  case,  the  signer  would  not  have  been 
bound  by  his  signature,  for  two  reasons:  first,  that  he 
never  in  fact  signed  the  writing  declared  on ;  and,  secondly, 
that  he  never  intended  to  sign  any  such  contract. 

In  the  present  case,  the  first  reason  does  not  apply,  but 


FOSTER   V.  MACKINNON.  243 

the  second  reason  does  apply.  The  defendant  never 
intended  to  sign  that  contract,  or  any  such  contract.  He 
never  intended  to  put  his  name  to  any  instrument  that 
then  was  or  thereafter  might  become  negotiable.  He  was 
deceived,  not  merely  as  to  the  legal  effect,  but  as  to  the 
actual  contents  of  the  instrument. 

We  are  not  aware  of  any  case  in  which  the  precise  ques- 
tion now  before  us  has  arisen  on  bills  of  exchansre  or 
promissory  notes,  or  been  judicially  discussed.  In  the 
case  of  Ingham  v.  Primrose,  7  C.  B.  n.  s.  83;  28  L.  J.  C. 
P.  294,  and  the  case  of  Nance  v.  Lary,  5  Ala.  370,  cited  1 
Parsons  on  Bills,  114,  n.,  both  cited  by  the  plaintiff,  the 
facts  were  very  different  from  those  of  the  case  before  us, 
and  have  but  a  remote  bearing  on  the  question.  But,  in 
Putnam  v.  Sullivan,  an  American  case,  reported  in  4  Mass. 
45,  and  cited  in  Parsons  on  Bills  of  Exchange,  vol.  i.  p. 
Ill,  n.,  a  distinction  is  taken  by  Chief  Justice  Parsons 
between  a  case  where  an  indorser  intended  to  indorse  such 
a  note  as  he  actually  indorsed,  being  induced  by  fraud  to 
indorse  it,  and  a  case  wdiere  he  intended  to  indorse  a 
different  note  and  for  a  different  purpose.  And  the  court 
intimated  an  opinion  that  even  in  such  a  case  as  that,  a 
distinction  might  prevail  and  protect  the  indorsee. 

The  distinction  in  the  case  now  under  consideration  is  a 
much  plainer  one ;  for,  on  this  branch  of  the  rule,  we  are 
to  assume  that  the  indorser  never  intended  to  indorse  at 
all,  but  to  sign  a  contract  of  an  entirely  different  nature. 

Por  these  reasons,  we  think  the  direction  of  the  Lord 
Chief  Justice  was  right. 

With  respect,  however,  to  the  second  branch  of  the 
rule,  we  are  of  opinion  that  the  case  should  undergo 
further  investigation.  We  abstain  from  giving  our  rea- 
sons for  this  part  of  our  decision  only  lest  they  should 
prejudice  either  party  on  a  second  inquiry. 

The  rule,  therefore,  will  be  made  absolute  for  a  new 
trial.  Rule  absolute. 


244  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

ALDOUS    I'.    CORNWELL. 

Queen's  Bench  of  England,  Trinity,  1868.     L.  R.  3  Q.  B.  573. 

An  alteration  expressing  only  the  effect  in  law  of  the  instrument  as  it 
stood  before  will  not  affect  the  validity  of  tlie  same. 

Declaration  that  the  defendant,  on  the  8th  of  November, 
1865,  by  his  promissory  note,  promised  to  pay  the  plaintiff 
£125  on  demand.  Plea,  that  the  defendant  did  not  make 
the  note  as  alleged. 

At  the  trial  the  following  promissory  note,   signed  by 

the  defendant,  was  put  in  evidence : 

'November  8th,  1865. 
'On  demand. 

I  promise  to  pay  Mr.  Ed.  Aldous  the  sum  of  £125.' 

But  it  was  proved  that  the  promissory  note,  when 
delivered  to  the  plaintiff,  did  not  contain  the  words  '  On 
demand,'  and  that  these  words  had  been  inserted  while 
the  note  was  in  the  possession  of  the  plaintiff,  the  payee, 
without  the  knowledge  of  the  defendant,  but  there  was  no 
positive  evidence  to  show  by  whom  the  alteration  was 
made.  The  learned  judge  directed  a  verdict  for  the  plain- 
tiff, reserving  leave  to  move  to  enter  a  verdict  for  the 
defendant,  if  the  note  was  made  void  by  the  alteration. 
Rule  obtained  accordingly. 

Lush,  J.,  for  the  court.  —  This  was  an  action  by  the 
payee  against  the  maker  of  a  promissory  note,  expressed 
to  be  payable  on  demand.  The  plea  denied  the  making 
of  the  note. 

At  the  trial  before  the  late  Mr.  Justice  Shee  it  was 
proved  that  the  words  '  on  demand  '  were  added  after  the 
note  had  been  delivered  to  the  plaintiff.  It  did  not  appear 
who  made  the  alteration,  but  it  was  assumed  to  have  been 
made  by  the  plaintiff,  and  no  question  was  raised  as  to 
this  fact.     The  learned  judge  directed  a  verdict  for  the 


ALDOUS  V.  CORNWELL.  245 

plaintiff,  reserving  the  point  wlietlier  by  such  an  altera- 
tion the  note  was  rendered  void.  No  objection  having 
been  made  to  the  pleadings,  we  must  consider  the  ease  as 
if  the  question  had  been  properly  raised  on  the  record. 

It  was  admitted,  and  properly  so,  on  the  argument,  that 
the  addition  of  these  words  did  not  alter  the  legal  effect  of 
the  instrument,  but  only  expressed  what  the  law  would 
otherwise  have  implied.  But  it  was  contended,  upon  the 
authority  of  Pigot's  Case,  11  Rep.  26  b.  and  ^Master  v. 
Miller,  4  T.  R.  320;  1  Sm.  L.  C.  796,  that  the  alteration, 
having  been  made  by  the  payee  and  holder,  though  in  a 
matter  not  material,  avoided  the  instrument. 

In  Pigot's  Case  it  is  said,  '  If  the  obligee  himself  alters 
the  deed  by  any  of  the  said  ways  (viz.  by  interlineation, 
addition,  erasing,  or  by  drawing  a  pen  through  the  line, 
etc.),  although  it  is  in  words  not  material,  yet  the  deed  is 
void  ;  but  if  a  stranger,  without  his  privity,  alters  the 
deed  by  any  of  the  said  ways  in  any  point  not  material,  it 
shall  not  avoid  the  deed.'  For  this  proposition  Dyer,  9 
Eliz.  fol.  261  b,  is  cited.  Shep.  Touch,  vol.  1,  p.  68,  is 
to  the  same  effect.  It  was  found  as  a  fact  in  Pigot's  Case 
that  the  alteration,  which  was  not  a  material  one,  was 
made  by  a  stranger,  and  judgment  was  given  for  the  plain- 
tiff, so  that  the  case  itself  is  not  a  decision  upon  the  point 
in  question.  Master  v.  Miller  extended  the  doctrine,  as 
regards  material  alterations,  to  bills  of  exchange;  and 
subsequent  cases  have  applied  it  indiscriminately  to  all 
written  instruments,  whether  under  seal  or  not.  See 
Davidson  v.  Cooper,  11  Mees.  &  W.  778;  in  error,  13 
Mees.  &  W.  343.  No  authority  was  cited,  nor  are  we  able 
to  find  one,  in  which  the  doctrine  has  been  acted  upon  and 
an  instrument  held  to  be  avoided  by  an  immaterial  altera- 
tion. There  are  cases  to  the  contrary,  though  we  cannot 
regard  them  as  entirely  satisfactory.  Thus,  in  Lord  Darcy 
and  Sharpe's  Case,  1  Leon.,  an  alteration  in  a  bond  not 
material,  made  by  the  executor  of  the  obligee,  was  held 
not  to  vitiate  the  bond.      But  the  court  seemed  to  lay 


246  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

stress  on  the  fact  that  the  alteration  was  in  favor  of  the 
obligor. 

In  Sanderson  v.  Symoncls,  1  Ball  &  B.  426,  the  holder 
of  a  policy  of  insurance  on  a  ship,  on  a  voyage  to  the  coast 
of  Africa,  during  her  stay  tliere,  and  back  to  Liverpool, 
with  liberty  to  '  touch  and  stay  at  any  port  or  places  to 
sell,  barter,  and  exchange,  and  load  and  unload  and  reload 
at  any  of  the  ports  and  places  she  may  call  at, '  had,  fear- 
ing that  these  words  might  not  be  sufficiently  extensive 
for  his  purpose,  added  after  the  words  '  during  her  stay  ' 
the  words  '  to  trade. '  Several  of  the  underwriters  had 
initialed  the  alteration,  but  the  defendant  refused  to  do  so, 
on  the  ground  that  he  never  underwrote  trading  policies 
to  Africa,  and  he  offered  before  the  loss  to  cancel  his  sub- 
scription and  return  the  premium  rather  than  assent  to 
such  an  alteration.  The  plaintiff  refused  to  accept  this 
offer,  and  held  to  the  policy.  The  ship  was  afterwards 
lost,  and  the  plaintiff  sued  the  defendant  for  his  subscrip- 
tion ;  the  defendant  resisted  the  action  on  the  ground  that 
the  alteration  avoided  the  policy  so  far  as  he  was  con- 
cerned. It  is  to  be  observed  here  that  both  parties  thought 
the  alteration  material  at  the  time  it  was  made.  The 
court,  however,  held  that  the  words  so  added  expressed  no 
more  than  was  already  contained  in  the  policy  as  signed 
by  the  defendant,  and  therefore  that  the  defendant  was 
not  discharged.  This  case  might  have  been  cited  as  con- 
clusive upon  the  question  before  us  but  for  the  reasons 
assigned  by  the  different  members  of  the  court  for  their 
judgment.  Dallas,  C.  J.,  said  that  the  rule  was  intended 
not  so  much  to  guard  against  fraud  as  to  insure  the  iden- 
tity of  the  instrument  and  prevent  the  substitution  of 
another  without  the  privity  of  the  party  concerned.  '  But 
the  present  case,'  he  said,  '  stands  on  its  own  circum- 
stances. The  instrument  is  a  policy  of  insurance  signed 
by  a  number  of  individuals  wholly  unconnected  in  interest, 
and  between  whom  no  privity  can  exist.  Indeed,  it  has 
never  been  contended  that  this  was  an  alteration  without 


ALDOUS  V.  CORNWELL.  247 

the  privity  of  the  party ;  and  the  old  cases  turn  entirely 
on  alteration  made  without  the  privity  of  the  party. 
Here  the  instrument  was  shown  to  all  the  parties  con- 
cerned. Those  who  put  their  initials  to  the  alteration 
thereby  expressly  signified  their  consent  to  it  ;  those  who 
refused  to  do  so  expressed  their  denial  by  the  absence  of 
their  initials.  But  the  latter  were  bound  by  the  policy  as 
it  stood  at  first,  the  former  by  the  policy  in  its  altered 
state.'  Park,  J.,  said,  '  In  all  the  cases  on  policies  the 
court  refers  to  the  materiality  of  the  alterations.  The 
alteration  here  is  immaterial;  the  risk  stands  as  it  stood 
before,  and  the  writing  immaterial  words  does  not  vacate 
the  policy.'  And  Burrough  and  Eichardsou,  JJ.,  base 
their  judgment  on  the  fact  that  the  risk  was  not  varied  by 
the  alteration. 

Had  the  alteration  in  that  case  been  a  material  one,  the 
fact  that  some  of  the  underwriters  had  assented  to  it,  and 
that  it  had  been  shown  to  those  who  refused  ^  their  assent, 
would  not  have  prevented  the  operation  of  the  rule  as 
against  the  latter.  This  had  been  decided  in  two  prior 
cases  in  the  same  court,  Langhorn  v.  Cologau  ^  and  Fairlie 
V.  Christie,^  in  each  of  which  the  dissentient  underwriters 
had  been  held  to  be  discharged  by  a  material  alteration  in 
the  policy,  though  they  had  been  asked  to  join  others  who 
had  assented  and  had  refused  to  do  so.  The  judgment  of 
Dallas,  C.  J.,  cannot  therefore  stand  upon  that  ground, 
and  it  is  obvious  the  real  ground  of  the  decision  in  San- 
derson V.  Symonds  was  that  the  defendant  was  not  and 
could  not  be  prejudiced  by  the  alteration.  Why  the  court 
should  have  limited  the  doctrine  they  there  laid  down  to 
policies  of  insurance  it  is  not  easy  to  understand.  We  can- 
not discover  any  reason  for  making  a  distinction  between 
that  and  any  other  species  of  contract. 

Another  case  is  that  of  Catton  v.  Simpson,  8  Ad.  &  E. 
136;  there  the  plaintiff  had  joined   the  defendant  as  his 

1  Printed  '  expressed,'  but  corrected  in  '  Erratum  '  of  the  volume. 

2  4  Taunt.  330.  3  7  Taunt.  416. 


248  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

surety  in  a  joint  and  several  promissory  note.  The  payee, 
having  pressed  the  defendant  for  payment,  had  consented 
to  give  time  on  his  procuring  a  third  person  to  add  his 
name  to  the  note.  The  plaintiff,  who  had  afterwards  paid 
a  moiety  of  the  amount,  sued  the  defendant  for  re-pay- 
ment, and  it  was  objected  that,  as  the  name  of  the  third 
party  had  been  added  without  the  plaintiff's  consent,  he 
had  been  discharged  and  had  paid  the  money  in  his  own 
wrong.  Patteson,  J.,  who  tried  the  cause,  directed  a  ver- 
dict for  the  plaintiff;  and  the  court  refused  a  rule  for  a 
new  trial,  holding  'that  it  was  not  an  alteration  of  the  note, 
but  an  addition  which  had  no  effect.'  It  is  true  that  in 
the  subsequent  case  of  Gardner  v.  Walsh,  5  El.  &  B.  83, 
this  court  expressly  overruled  Catton  v.  Simpson,  not  how- 
ever on  the  ground  that  an  immaterial  alteration  vacated 
the  instrument,  but  on  the  ground  that  the  alteration  was 
a  material  one. 

This  being  the  state  of  the  authorities,  we  think  we  are 
not  bound  by  the  doctrine  in  Pigot's  Case  or  the  authority 
cited  for  it  ;  and  not  being  bound,  we  are  certainly  not 
disposed  to  lay  it  down  as  a  rule  of  law  that  the  addition 
of  words  which  cannot  possibly  prejudice  any  one  destroys 
the  validity  of  the  note.  It  seems  to  us  repugnant  to 
justice  and  common-sense  to  hold  that  the  maker  of  a 
promissory  note  is  discharged  from  his  obligation  to  pay  it 
because  the  holder  has  put  in  writing  on  the  note  what  the 
law  would  have  supplied  if  the  words  had  not  been  written. 
We  therefore  discharge  the  rule. 

Rule  discharged. 


BANK  OF   COMMERCE   v.  UNION   BANK.  249 

BANK   OF  COMMERCE  v.    UNION   BANK. 
Court  of  Appeals  of  New  York,  April,  1850.     3  Comst.  230. 

The  drawee  of  a  bill  of  exchange  in  paying  it  is  not  bound  to  knov,- 
whether  the  body  of  the  bill  is  genuine. 

Assumpsit  by  tlie  drawee  of  a  bill  of  exchange  against 
the  late  holder  to  recover  the  amount  thereof  paid  to  him, 
as  paid  under  mistake  of  fact.  The  bill  as  originally 
drawn  was  a  request  to  the  plaintiff  to  pay  '  one  hundred 
and  five  dollars  to  the  order  of  J.  Durand. '  After  it  was 
delivered  the  word  '  hundred  '  was  fraudulently  altered 
to  '  thousand,'  and  the  name  '  Durand  '  to  '  Bonnet.'  J. 
Bonnet  now  indorsed  it  for  value  and  without  notice  to  the 
State  Bank  of  Charleston,  which  sent  it  for  collection  to 
the  defendant;  to  which  the  plaintiff  paid  it  at  sight,  in 
ignorance  of  the  alterations.  The  alterations  having  after- 
wards come  to  light,  the  plaintiff  demanded  of  the  defend- 
ant the  return  of  the  money,  which  was  refused. 

The  court  below  charged  the  jury  that  on  such  facts  the 
plaintiff  would  be  entitled  to  recover.  The  defendant 
excepted.  Judgment  for  the  plaintiff;  appeal  by  the 
defendant. 

EuGGLES,  J.,  for  the  court.  — The  payment  of  a  bill  of 
exchange  by  the  drawee  is  ordinarily  an  admission  of  the 
drawer's  signature,  which  he  is  not  afterwards,  in  a  con- 
troversy between  himself  and  the  holder,  at  liberty  to 
dispute;  and  therefore  if  the  drawer's  signature  is  on  a 
subsequent  day  discovered  to  be  a  forgery,  the  drawee 
cannot  compel  the  holder  to  whom  he  paid  the  bill  to 
restore  the  money  unless  the  holder  be  in  some  way  impli- 
cated in  the  fraud.  Price  v.  Neal,  3  Burr.  1354.^  This 
rule  is  founded  on  the  supposed  negligence  of  the  drawee  in 
failing,  by  an  examination  of  the  signature  when  the  bill 
is  presented,  to  detect  the  forgery  and  refuse  payment. 

1  Post,  p.  267. 


250  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

The  drawee  is  supposed  to  know  the  handwriting  of  the 
drawer,  who  is  usually  his  customer  or  correspondent.  As 
between  him,  therefore,  and  an  innocent  holder,  the  pajer, 
from  his  imputed  negligence,  must  bear  the  loss.  In 
Price  V.  Neal  the  plaintiff  had  paid  to  Neal,  the  holder,  two 
bills  of  exchange  purporting  to  be  drawn  on  him  by  Sutton, 
whose  name  was  forged.  On  discovery  of  the  forgery 
Price  brought  his  action  against  Neal  to  recover  back  the 
money  as  paid  by  mistake.  Lord  Mansfield,  in  delivering 
the  opinion  of  the  court  in  favor  of  the  defendant,  said  '  it 
was  incumbent  upon  the  plaintiff  to  be  satisfied  that  the  bill 
drawn  upon  him  was  the  drawer's  hand  before  he  accepted 
or  paid  it,  but  it  was  not  incumbent  upon  the  defendant  to 
inquire  into  it.'  'Whatever  neglect  there  was,  was  on  his 
side.  It  is  a  misfortune  which  has  happened  without  the 
defendant's  fault  or  neglect.' 

In  Wilkinson  v.  Lutwidge,  1  Strange,  648,  Lord  Chief 
Justice  Pratt  was  of  opinion  that  '  acceptance  was  a  suffi- 
cient acknowledgment  of  the  drawer's  handwriting  on  the 
part  of  the  acceptor,  who  must  be  supposed  to  know  the 
hand  of  his  own  correspondent.'  So  the  acceptance  of  a 
bill,  whether  general,  or  for  honor,  or  supra  protest,  after 
sight  of  the  hill,  admits  the  genuineness  of  the  signature  of 
the  drawer  ;  and  consequently  if  the  signature  of  the 
drawer  turns  out  to  be  a  forgery,  the  acceptance  will 
nevertheless  be  binding,  and  entitle  a  bona  fide  holder  for 
value  and  without  notice  to  recover  thereon  according  to 
its  tenor.  ^     Story  on  Bills,  §  262. 

But  it  is  plain  that  the  reason  on  which  the  above  rule 
is  founded  does  not  apply  to  a  case  where  the  forgery  is 
not  in  counterfeiting  the  name  of  the  drawer,  but  in  alter- 
ing the  body  of  the  bill.  There  is  no  ground  for  presum- 
ing the  body  of  the  bill  to  be  in  the  drawer's  handwriting, 

1  This  language  should  he  noticed  ;  it  is  not  stated  that  acceptance 
warrants  the  genuineness  of  the  signature,  hut  that  it  'admits'  it,  and  is 
'  binding '  in  favor  of  an  innocent  purchaser.  See  Bills  and  Notes  ( Students' 
Series),  76-79. 


BANK   OF  COMMERCE   v.  UNION  BANK.  251 

or  in  any  handwriting  known  to  tlie  acceptor.  In  the 
present  case  that  part  of  the  bill  is  in  the  handwriting  of 
one  of  the  clerks  in  the  office  of  the  Canal  and  Banking 
Company  in  New  Orleans.  The  signature  was  in  the 
name  and  handwriting  of  the  cashier.  The  signature  is 
genuine.  The  forgery  was  committed  by  altering  the  date, 
number,  amount,  and  payee's  name.  No  case  goes  the 
length  of  saying  that  the  acceptor  is  presumed  to  know 
the  handwriting  of  the  body  of  the  bill,  or  that  he  is  better 
able  than  the  indorsers  to  detect  an  alteration  in  it.  The 
presumption  that  the  drawee  is  acquainted  with  the 
drawer's  signature,  or  able  to  ascertain  whether  it  is  genu- 
ine, is  reasonable.  In  most  cases  it  is  in  conformity  with 
the  fact.  But  to  require  the  drawee  to  know  the  hand- 
writing of  the  residue  of  the  bill  is  unreasonable.  It 
would,  in  most  cases,  be  requiring  an  impossibility.  Such 
a  rule  would  be  not  only  arbitrary  and  rigorous  but  un- 
just. The  drawee  would  undoubtedly  be  answerable  for 
negligence  in  paying  an  altered  bill,  if  the  alteration  were 
manifest  on  its  face.  Whether  it  was  so  or  not  in  this 
case  was  properly  submitted  to  the  jury,  who  found  that  it 
was  paid  by  mistake  and  without  knowledge  of  or  reason 
to  suspect  the  fraudulent  alterations.  It  would  have  been 
difficult  to  find  otherwise  upon  the  evidence,  the  bill  hav- 
ing passed  through  the  defendants'  bank  and  the  Charles- 
ton bank  without  suspicion.  If  the  forgery  had  been  in 
the  name  of  the  drawer,  it  might  not  perhaps  have  been 
incumbent  on  those  banks  to  scrutinize  the  bill,  because 
they  might  have  relied  on  the  drawer's  better  knowledge 
of  the  hand ;  but  the  forgery  being  in  the  body  of  the  bill, 
the  plaintiffs  were  not  more  in  fault  than  the  defendants. 

The  greater  negligence  in  a  case  of  this  kind  is  charge- 
able on  the  party  who  received  the  bill  from  the  perpetrator 
of  the  forgery.  So  far  as  respects  the  genuineness  of  the 
bill,  each  indorser  receives  it  on  the  credit  of  the  previous 
indorsers ;  and  it  was  the  interest  and  duty,  in  the  present 
case,  of  the  Bank  of  Charleston  to  satisfy  itself  that  the 


252  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

bill  was  genuine,  or  that  its  immediate  iudorser  was  able  to 
respond  in  case  the  bill  should  prove  to  be  spurious.  The 
party  who  fraudulently  passed  the  bill  cannot  avoid  his 
liability  to  refund  on  the  pretence  of  delay  in  detecting 
the  forgery  or  in  giving  notice  of  it  ;  and  if  reasonable 
diligence  is  exercised  in  giving  notice  after  the  forgery 
comes  to  light,  it  is  all  that  any  of  the  parties  can  require. 
Canal  Bank  v.  The  Bank  of  Albany,  1  Hill,  287,  292,  293. 

In  Smith  v.  Mercer,  6  Taunt.  76,  in  Cocks  v.  Masterman, 
9  Barn.  &  C.  902,  and  in  Price  v.  Neal,  3  Burr.  1354,  the 
plaintiffs  who  paid  the  forged  bills,  being  chargeable  with 
a  knowledge  of  the  signature  of  the  drawer  (which  was 
forged),  were  held  to  have  paid  it  negligently  and  without 
due  caution  and  examination,  and  on  that  ground  it  was 
that  the  defendants  to  whom  they  paid  the  money  were 
held  not  liable  without  immediate  notice  of  the  forgery. 
But  in  the  present  case  no  such  negligence  is  imputable  to 
the  plaiutilfs,  the  plaintiffs  being  no  more  capable  of 
detecting  the  forged  alteration  by  inspection  of  the  bill 
than  either  of  the  other  parties. 

This  action  is  not  founded  on  the  bill  as  an  instrument 
containing  the  contract  on  which  the  suit  is  brought.  The 
acceptor  can  never  have  recourse  on  the  bill  against  the 
indorsers.  But  the  plaintiff's  right  of  recovery  rests  on 
equitable  grounds.  In  the  Canal  Bank  v.  The  Bank  of 
Albany  the  principle  was  recognized,  that  money  paid  by 
one  party  to  another  through  mutual  mistake  of  facts  in 
respect  to  which  both  were  equally  bound  to  inquire,  may 
be  recovered  back.  The  defendants  here,  as  in  that  case, 
have  obtained  the  money  of  the  plaintiff  without  right  and 
on  the  exhibition  of  a  forged  title  as  genuine,  the  forgery 
being  unknown  to  both  parties.  The  defendants  ought 
not  in  conscience  to  retain  the  money,  because  it  does  not 
belong  to  them ;  and  for  the  further  reason  that  the  defend- 
ants and  the  previous  indorsers  have  each,  on  the  same 
principle,  '  their  remedy  over  against  the  party  to  whom 
they  respectively  paid  the  money,  until  the  wrong-doer  is 


WOOD   V.  STEELE.  253 

finally  made  to  pay.    If  that  party  sliould  be  irresponsible, 

or  if  lie  cannot  be   found,  the  loss   ought  to  fall  on  the 

party  Avho,  without  due  caution,  took  the  bill  from  .him. 

In  cases  where  no  negligence  is  imputable  to  the  drawee 

in  failing  to  detect  the  forgery,  the  want  oE  notice  within 

the  ordinary  time  to  charge  the  previous  parties  to  the  bill 

is  excused,  provided  notice  of  the  forgery  be  given  as  soon 

as  it  is  discovered. 

Judgment  affirmed. 


WOOD  V.    STEELE. 

Supreme  Court  of  United  States,  December,  1867.     6  Wall.  80. 

Alteratiou  of  the  date  of  a  promissory  uote  by  a  party  to  it,  after  sig- 
nature and  delivery  by  the  signer,  without  his  consent,  destroys  the  note  as 
a  contract  by  him. 

The  case  is  stated  in  the  opinion. 

S WAYNE,  J.,  for  the  court.  —  The  action  was  brought  by 
the  plaintiff  in  error  upon  a  promissory  note  made  by 
Steele  and  Newson,  bearing  date  October  11th,  1858,  for 
$3,720,  payable  to  their  own  order  one  year  from  date, 
with  interest  at  the  rate  of  two  per  cent  per  month,  and 
indorsed  by  them  to  Wood  the  plaintiff. 

Upon  the  trial  it  appeared  that  Newson  applied  to  Allis, 
the  agent  of  Wood,  for  a  loan  of  money  upon  the  note  of 
himself  and  Steele.  Wood  assented,  and  Newson  was  to 
procure  the  note.  Wood  left  the  money  with  Allis,  to  be 
paid  over  when  the  note  was  produced.  The  note  was 
afterwards  delivered  by  Newson  and  the  money  paid  to 
him.  Steele  received  no  part  of  it.  At  that  time  it 
appeared  on  the  face  of  the  note  that  *  September  '  had 
been  stricken  out  and  '  October  11th  '  substituted  as  the 
date.  This  was  done  after  Steele  had  signed  the  note,  and 
without  his  knowledge  or  consent.  These  circumstances 
were   unknown  to  Wood   and  to  Allis.     Steele  was  the 


254  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

surety  of  Newson.  It  does  not  appear  that  there  was  any 
controversy  about  the  facts.  The  argument  being  closed, 
the  court  instructed  the  jury  '  that  if  the  said  alteration 
was  made  after  the  note  was  signed  by  the  defendant 
Steele,  and  by  him  delivered  to  the  other  maker,  Newson, 
Steele  was  discharged  from  all  liability  on  said  note.'  The 
plaintiff  excepted.  The  jury  found  for  the  defendant, 
and  the  plaintiff  prosecuted  this  writ  of  error  to  reverse 
the  judgment. 

Instructions  were  asked  by  the  plaintiff's  counsel,  which 
were  refused  by  the  court.  One  was  given  with  a  modifi- 
cation. Exceptions  were  duly  taken,  but  it  is  deemed 
unnecessary  particularly  to  advert  to  them.  The  views  of 
the  court  as  expressed  to  the-  jury  covered  the  entire  ground 
of  the  controversy  between  the  parties. 

The  state  of  the  case,  as  presented,  relieves  us  from  the 
necessity  of  considering  the  questions,  upon  whom  rested 
the  burden  of  proof,  the  nature  of  the  presumption  arising 
from  the  alteration  apparent  on  the  face  of  the  paper,  and 
whether  the  insertion  of  a  day  in  a  blank  left  after  the 
month  exonerates  the  maker  who  has  not  assented  to  it. 

Was  the  instruction  given  correct? 

It  was  a  rule  of  the  common  law  as  far  back  as  the  reign 
of  Edward  III.  that  a  rasure  in  a  deed  avoids  it.  Brooke's 
Abridgment,  Faits,  pi.  11.  The  effect  of  alterations  in 
deeds  was  considered  in  Pigot's  Case,  11  Coke,  27,  and 
most  of  the  authorities  upon  the  subject  down  to  that  time 
were  referred  to.  In  Master  v.  Miller,  4  T.  R.  320;  1 
Smith's  L.  C.  1141,  the  subject  was  elaborately  examined 
with  reference  to  commercial  paper.  It  was  held  that  the 
estaHished  rules  apply  to  that  class  of  securities  as  well 
as  to  deeds.  It  is  now  settled,  in  both  English  and 
American  jurisprudence,  that  a  material  alteration  in  any 
commercial  paper,  without  the  consent  of  the  party  sought 
to  be  charged,  extinguishes  his  liability.  The  materiality 
of  the  alteration  is  to  be  decided  by  the  court.  The  ques- 
tion of  fact  is  for  the  jury.     The  alteration  of  the  date, 


WOOD  V.  STEELE.  255 

whether  it  hasten  or  delay  the  time  of  payment,  has  been 
uniformly  held  to  be  material.  The  fact  in  this  case  that 
the  alteration  was  made  before  the  note  passed  from  the 
hands  of  ISTewson  cannot  affect  the  result.  He  had  no 
authority  to  change  the  date. 

The  grounds  of  the  discharge  in  such  cases  are  obvious. 
The  agreement  is  no  longer  the  one  into  which  the  defend- 
ant entered.  Its  identity  is  changed;  another  is  substi- 
tuted without  his  consent,  and  by  a  party  who  had  no 
authority  to  consent  for  him.  There  is  no  longer  the 
necessary  concurrence  of  minds.  If  the  instrument  be 
under  seal,  he  may  well  plead  that  it  is  not  his  deed;  and 
if  it  be  not  under  seal,  that  he  did  not  so  promise.  In 
either  case  the  issue  must  necessarily  be  found  for  him. 
To  prevent  and  punish  such  tampering,  the  law  does  not 
permit  the  plaintiff  to  fall  back  upon  the  contract  as  it 
was  originally.  In  pursuance  of  a  stern  but  wise  policy 
it  annuls  the  instrument,  as  to  the  party  sought  to  be 
charged. 

The  rules  that  where  one  of  two  innocent  persons  must 
suffer  he  who  has  put  it  in  the  power  of  another  to  do  the 
wrong  must  bear  the  loss,  and  that  the  holder  of  commer- 
cial paper  taken  in  good  faith  and  in  the  ordinary  course 
of  .business  is  unaffected  by  any  latent  infirmities  of  the 
security,  have  no  application  in  this  class  of  cases.  The 
defendant  could  no  more  have  prevented  the  alteration 
than  he  could  have  prevented  a  complete  fabrication ;  and 
he  had  as  little  reason  to  anticipate  one  as  the  other.  The 
law  regards  the  security,  after  it  is  altered,  as  an  entire 
forgery  with  respect  to  the  parties  who  have  not  consented, 
and  so  far  as  they  are  concerned  deals  with  it  accordingly. 

The  instruction  was  correct  and  the 

Judgment  is  affirmed. 


256  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

WOERALL  V.    GHEEN. 
Supreme  Court  of  Pennsylvania,  1861.     39  Penn.  St.  388. 

In  a  case  stated,  of  suit  upon  a  raised  negotiable  promissory  note  by  a 
bona  fide  holder  for  value  against  one  who  indorsed  it  before  the  altera- 
tion, ItL'ld,  that  the  plaintiff  might  recover  the  sum  fur  which  the  note  was 
origiuallj'  made. 

Assumpsit  by  the  holder  against  the  first  inclorser  of  a 
negotiable  promissory  note.  The  following  special  ver- 
dict was  rendered: 

'  Charles  M.  Layman  filled  up  a  printed  blank  note  in 
the  following  manner  and.  in  the  following  terms.  The 
annexed  is  a  correct  copy  as  it  was  executed  by  him : 

'October  14,  1857. 
$50. 

'  Thirty  days  after  date,  I  promise  to  pay  to  the  order  of 
Levi  A.  Gheen,  at  the  Bank  of  Chester  County, 

fifty  YQo  Dollars,  without 

defalcation,  for  value  received. 

Credit  the  drawer,  C.  M.  Layman. 

Levi  A.  Gheen. 

*  Layman  called  upon  Gheen  with  the  note,  and  requested 
him  to  indorse  it.  Gheen  did  so,  by  writing  his  name 
across  the  back  of  the  note,  and  signed  his  name  under  the 
words  "Credit  the  drawer."  Layman  then  took  the  note 
away  and  fraudulently  altered  its  amount  from  fifty  dol- 
lars to  one  hundred  and  fifty  dollars,  by  adding  the  figure 
"  1  "  between  the  %  and  the  figure  "  50, "  and  the  words 
"One  hundred  &"  before  the  word  "fift}'.'" 

'  The  fraud  was  so  well  executed  that  the  appearance  of 
the  note  was  not  such  as  to  excite  the  suspicions  of  a  man 
in  ordinary  business.  On  inspection  a  difference  in  the 
color  of  the  ink  with  which  the  words  "  One  hundred  & " 
were  written  may  be  perceived.' 


WOKRALL   V.  GHEEN.  257 

The  plaintiff  discounted  tlie  note  before  maturity  for 
value  and  without  knowledge  of  the  alteration,  and  with- 
out notice  thereof  further  than  the  foregoing  facts  indicate. 
Due  steps  were  taken  to  fix  the  defendant's  liability  as 
indorser. 

Judgment  below  ordered  for  the  defendant;  the  plaintiff 
sued  out  a  writ  of  error. 

LowRiE,  C.  J.,  for  the  court.  —  We  are  not  able  to  follow 
the  cases  of  Pagan  v.  Wylie  and  Graham  v.  Gillespie,  Koss 
on  Bills  and  Notes,  194,  195,  in  the  principal  point  decided 
there.  And  yet  we  would  not  be  understood  as  denying  the 
case  of  Young  v.  Grote  in  the  same  book,  p.  187,  4  Bing. 
253.  It  may  be  that  a  cheque  on  a  banker,  so  written  as  to 
be  easily  altered  by  the  bearer  of  it,  ought  to  be  treated 
iu  the  same  manner  as  instructions  sent  by  a  principal 
to  his  agent,  wherein  the  latter  is  not  allowed  to  suffer 
from  the  carelessness  of  the  former.  ^  Thus  probably 
alterations  in  cheques  may  be  properly  distinguished  from 
those  in  bills,  notes,  and  other  contracts.  We  doubt  it, 
however. 

This  is  a  case  of  a  printed  form  of  a  promissory  note, 
filled  up  by  the  maker,  and  then  indorsed  for  his  accom- 
modation by  another,  and  then  altered  by  the  maker  to  a 
larger  sum  by  taking  advantage  of  some  vacant  space  left 
in  the  form.  If  the  sura  had  been  left  entirely  blank,  the 
inference  would  have  been  that  the  parties  authorized  the 
holder  as  their  agent  in  filling  it  in,  and  they  would  have 
been  bound  accordingly.  But  where  a  sum  is  actually 
written,  we  can  make  no  such  inference  from  the  fact  that 
there  is  room  to  write  more.  This  fact  shows  careless- 
ness ;  but  it  was  not  the  carelessness  of  the  indorser,  but 
the  forgery  of  the  maker,  that  was  the  proximate  cause 
that  misled  the  holder.  And  we  know  not  how  we  can 
say  that  a  man  be  chargeable  with  a  contract  because  he 
did  not  use  proper  precaution  in  guarding  against  forgery 

^  See  Holmes  v.  Truniper,  post,  pp.  2.58,  265. 
17 


258  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

in  any  of  the  thousand  forms  it  may  take.  We  know  of 
no  way  of  saving  purchasers  of  negotiable  paper  from  the 
necessity  and  the  consequences  of  relying  on  the  charac- 
ter of  the  man  they  buy  it  from,  if  they  do  not  take  the 
trouble  of  inquiring  of  the  original  parties. 

But  this  plaintiff  had  no  hand  in  the  alteration,  and,  as 
this  is  a  case  stated,  we  are  not  met  by  any  discrepancy  of 
allegata  and  probata,  and  therefore  we  can  give  judgment 
for  the  true  amount  of  the  note.^  Ross  on  Bills  and  Notes, 
201.  This  brings  the  case  within  the  Hundred  Dollar  Act, 
and  therefore  the  judgment  must  be  without  costs. 

Judgment  for  plaintiff  for  $60.37^. 


HOLMES   V.  TRUMPER. 
Supreme  Com-t  of  Michigan,  April,  1871.     22  ]\Iich.  427. 

To  alter  a  promissory  note  materially,  after  delivery  of  it,  by  adding 
words  in  a  blank  left  at  the  end,  which  closes  with  tlie  words  '  with  in- 
terest at,'  avoids  the  note  even  in  the  hands  of  a  bona  fide  holder  for 
value. 

The  facts  are  sufficiently  stated  in  the  opinion, 

Christiancy,  J.,  for  the  court. — This  was  an  action 
brought  by  Holmes  against  Trumper  upon  a  promissory 
note  signed  by  the  latter,  which  note  was  partly  printed 
and  partly  in  writing,  a  printed  blank  having  been  used. 
The  following  is  a  copy  of  the  body  of  the  note  as  it 
appeared  upon  the  trial,  the  portions  in  italics  being 
printed  and  the  other  portions  written,  viz. :  — 

'  $400. 

*  One  year  after  doM  I  promise  to  paij  to  Lyman  Terry  or 
hearer,  four  hundred  dollars,  at  the  First  National  Bank 
of  Ann  Arbor,  value  received,  tvith  interest  at  10  per  cent, 
[signed]  Jacob  Trumper.' 

3  See  Bills  of  Exchange  Act,  64,  (1);  Bills  and  Notes  (Students' 
Series),  187,  note. 


HOLMES   V.  TRUMPER.  259 

There  was  evidence  on  the  part  of  the  defendant  tending 
to  show  that  the  note  had  been  altered  after  it  was  made 
and  delivered  to  the  payee  by  adding,  after  the  printed 
word  '  at, '  in  the  last  line,  the  figures  and  words  '  10  per 
cent,'  and  (as  is  to  be  fairly  inferred  from  the  whole 
record  and  the  argument,  though  not  expressly  stated), 
that  this  alteration  was  made  without  the  knowledge  or 
consent  of  the  maker. 

It  was  conceded  on  the  trial  that  the  plaintiff  was  a  bona 
fide  holder  of  the  note  before  due,  and  the  only  question 
in  the  case  is  whether  the  wrongful  alteration  of  the  note 
by  the  payee  or  any  subsequent  holder  (for  such  was  the 
only  inference,  there  being  no  evidence  showing  by  whom 
the  alteration  was  made)  rendered  the  note  void  in  the 
hands  of  the  plaintiff,  or  constituted  a  defence  as  against 
him  in  favor  of  the  maker. 

Without  extrinsic  evidence  of  authority  to  make  the 
alteration,  it  is  too  clear  to  require  the  citation  of  authori- 
ties, that  unless  the  note,  as  signed,  can  be  treated  as  a 
note  given  in  blank,  so  far  as  relates  to  the  rate  of  inter- 
est, giving  the  payee  or  holder  the  right  to  fill  the  blank 
by  inserting  the  rate,  the  alteration  must  be  treated  as  a 
forgery,  since  it  is  one  which,  if  valid,  would  enlarge  the 
liability  of  the  maker. 

We  are  entirely  satisfied  that  this  note  when  signed 
without  the  addition  of  the  words  '  10  per  cent '  was,  not- 
withstanding the  word  '  at,'  in  legal  effect,  a  complete 
and  valid  note,  drawing  the  legal  rate  of  interest  at  seven 
per  cent;  and  that  the  Avord  '  at,'  at  the  end  of  the  printed 
form,  might  readily  be  overlooked  by  the  signer,  or  dis- 
regarded as  of  no  consequence  if  noticed  at  all;  and  that 
there  was,  therefore,  no  such  blank  left  in  it  as  would 
warrant  the  payee  or  holder,  without  further  evidence  of 
assent,  to  insert  a  different  rate  of  interest.  See  Warring- 
ton V.  Early,  2  Ellis  &  Blackb.  763;  Waterman  v.  Vose, 
43  Maine,  504. 

The  case  which  may  be  regarded  as  coming  nearest  to 
supporting  the  implied  authority  to  insert  the  special  rate 


260  CASES   OX   BILLS,  NOTES,  AND   CHEQUES. 

in  this  case,  is  that  of  Visher  v.  Webster,  8  Cal.  109.  But 
whatever  may  be  the  authority  of  that  case  and  that  of 
I'isher  v.  Dennis,  6  Cal.  577,  upon  which  it  is  based,  we  do 
not  think  it  would  authorize  the  alteration  in  the  present 
case. 

The  note  in  that  case,  as  signed,  was  in  the  following 
form :  — 

'  One  day  after  date,  we  jointly  and  severally  promise  to 
pay  Messrs.  A.  IST,  Fisher  &  Co.,  or  order,  the  sum  of 
seven  hundred  and  eight  71-100  dollars,  for  value  received, 

with  interest,  monthly,  at  the  rate  of  per  cent  per 

annum,  per  month,  until  final  payment.' 

The  alteration  consisted  in  filling  this  blank  with  the 
word  '  five.'  Such  a  blank  in  the  body  of  the  note  would 
clearly  indicate  to  any  one  that  it  was  intended  to  be  filled, 
and  the  fact  that  it  was  jaayable  monthly  could  not  well  be 
overlooked.  But  in  the  case  before  us  the  insertion  of  the 
words  '  10  per  cent,'  at  the  end  of  the  note  after  the  single 
printed  word  '  at,'  can  hardly  be  called  the  filling  a  blank 
at  all;  and  though  it  is  urged  that  leaving  the  printed 
word  '  at '  at  the  close  of  the  note  was  calculated  to  facili- 
tate the  forgery,  by  inducing  in  other  parties  the  belief  of 
the  genuineness  of  the  words  added,  yet  it  may  be  said 
with  at  least  equal  force,  on  the  other  hand,  that  to  those 
looking  at  the  note  after  the  alteration  critically  enough  to 
notice  the  printed  word  '  at,'  the  printed  form  of  the  note 
itself  might  well  excite  suspicion  that  the  form  was 
specially  got  up  by  the  payee  to  render  the  forgery  more 
easy,  and  that  the  words  *  10  per  cent, '  added  at  the  end, 
were  rather  calculated  to  increase  than  to  allay  the  suspi- 
cion of  their  genuineness;  since,  if  the  note  was  got  up  and 
printed  only  with  the  intention  of  leaving  a  blank  for  the 
insertion  of  the  rate,  the  words,  '  per  cent, '  might  just  as 
well,  and  much  more  naturally  would  have  been,  printed 
after  a  small  blank  following  the  word  '  at.'  Even  the 
name  of  the  payee  was  printed  in  the  note.  Would  the 
payee,  in  honestly  getting  up  such  a  note,  have  it  printed 
without  printing  also  the  words  '  per  cent, '  which  would 


HOLMES   V.  TRUMPEE.  261 

in  all  eases  be  the  same,  whatever  the  rate?  These  con- 
siderations are  not  conclusive,  it  is  true,  but  they  are  not 
without  weight. 

We  think  the  courts  have  gone  quite  far  enough  in  sus- 
taining instruments  executed  in  blank,  and  the  implied 
authority  to  fill  them  up,  and  Ave  are  not  disposed  to  take 
a  step  in  advance  in  that  direction. 

The  counsel  for  the  plaintiff  in  error  fully  admits  the 
general  rule,  that  an  alteration  having  this  effect  thus  to 
increase  the  maker's  liability,  renders  the  note  void  as 
against  the  maker,  even  in  the  hands  of  a  bona  fide  holder 
for  value.  But  he  insists  that,  though  it  may  be  a  forgery, 
the  peculiar  facts  of  this  case  bring  it  within  a  principle 
which  constitutes  an  exception  to  the  general  rule;  that 
the  maker  was  guilty  of  negligence  in  leaving  a  blank 
apparently  intended  for  the  insertion  of  the  rate  per  cent 
unfilled,  and  without  drawing  a  line  through  the  blank  or 
erasing  the  word  '  at,'  to  indicate  that  it  was  not  to  be 
filled,  and  that  he  thereby  invited  and"  facilitated  the  for- 
gery in  a  manner  calculated  to  impose  upon  innocent  par- 
ties, and  that  he  must  therefore,  as  between  him  and  such 
innocent  parties, '  be  held  to  pay  the  note,  in  its  altered 
form,  in  the  same  manner  as  if  it  had  been  originally  so 
drawn,  on  the  principle  that,  'where  one  of  two  innocent 
parties  must  suifer  by  the  fault  of  a  third,  he  shall  sustain 
the  loss  who  put  it  in  the  power  of  the  third  to  occasion 
it;  '  or,  as  expressed  by  the  Louisiana  court,  in  Isnard  v. 
Torres  et  al.,  10  La.  An.  103:  '  Where  one  of  two  parties, 
neither  of  whom  has  acted  dishonesth',  must  suffer,  he 
shall  suffer  who,  by  his  own  act,  has  occasioned  the  confi- 
dence and  conseqvient  injury  of  the  other. ' 

This  principle  is  one  of  quite  general  application,  and 
where  properly  understood  and  limited,  it  is  one  of  mani- 
fest equity ;  but  it  has  many  limitations  and  qualifications. 
Whether  the  present  case  falls  within  it  or  constitutes  an 
exception  is  a  question  of  some  nicety,  requiring  consider- 
able accuracy  of  discrimination  for  its  solution,  and  upon 
which   unanimity   of  decision   could    perhaps    hardly   be 


262  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

expected;  and  we  accordingly  find  that  able  courts  have 
arrived  at  opposite  conclusions  upon  it.  But,  upon  prin- 
ciple and  the  weight  of  authority,  we  think  the  liability 
of  the  maker  upon  the  note,  as  altered,  cannot  be  main- 
tained. The  general  principle  that  '  where  one  of  two 
innocent  parties  must  suffer,'  etc.,  upon  which  the  plain- 
tiff in  error  relies,  as  stated  by  us  in  Burson  v.  Hunting- 
ton, ^  decided  at  the  last  October  term,  is  one  which,  in  its 
application,  is  mainly  confined  to  cases  where  the  third 
person,  whose  act  or  default  has  occasioned  the  loss,  has 
been,  in  some  sense  or  to  some  extent,  the  agent  of  the 
party  who  is  made  to  sustain  the  loss,  or  when  the  latter, 
by  his  acts  or  negligence,  has  authorized  the  other  party 
to  consider  him  as  such;  and  in  all  the  cases  (unless  this 
is  an  exception)  where,  upon  the  general  principle  relied 
upon,  a  party  has  been  held  liable  upon  a  written  contract 
on  the  ground  of  negligence  alone,  without  reference  to 
such  agency,  he  has  only  been  held  liable  upon  it  in  the 
shape  in  which  he  allowed  it  to  go  from  his  hands,  and  not 
as  criminally  altered  by  another.  Thus,  if  an  acceptor  of 
a  bill  pay  and  take  it  up,  and  then,  without  cancellation 
or  any  mark  to  denote  its  payment,  throws  it  into  the 
street,  and  it  gets  into  the  hands  of  a  bona  fide  holder 
before  apparently  dishonored  or  overdue,  the  acceptor  will 
be  liable  upon  it.  See  Ingham  v.  Primrose,  7  C.  B.  n.  s. 
82;  Foster  v.  Mackinnon,  Law  Rep.  4  C.  P.  704.2  g^^t 
even  such  a  case  does  not  wholly,  perhaps,  exclude  the 
idea  of  agency;  since  a  party  thus  throwing  his  acceptance 
into  the  streets,  may  be  said,  as  between  him  and  the 
innocent  holder,  to  have  authorized  any  one  who  might 
pick  it  up  to  negotiate  it. 

As  between  the  maker  of  commercial  paper  and  an 
innocent  party  acting  upon  the  faith  of  the  paper,  which 
the  maker  has  voluntarily  and  intentionally  executed  and 
even  negligently  allowed  to  go  out  of  his  hands  and  to  get 
into  circulation,  the  general  principle  we  are  discussing 
would  preclude  such  maker  from  showing  that  the  paper 
1  Ante,  p.  227.  ^  Ante,  p.  237. 


HOLMES  V.  TRUMPER.  263 

was  not  intended  to  have  the  effect  which  its  appearance 
indicated,  though,  as  between  the  original  parties,  many 
things  miglit  be  shown  to  defeat  it.  It  is  substantially  a 
representation  upon  which  he  has  authorized  innocent 
parties  to  act  ;  and  when  they  have  thus  acted  he  must  be 
held  by  the  contract  indicated  by  the  representation  thus 
made. 

But  this  reasoning  extends  only  to  the  paper  as  made 
and  issued  by  him,  or  as  he  has  thereby  authorized  some 
other  person  to  change  its  terms;  and  the  note  in  this  case 
being  a  complete  legal  instrument  when  issued,  to  hold 
him  bound  by  the  contract,  as  altered  by  the  forgery, 
involves  the  idea  that  the  person  committing  the  forgery 
was  his  agent  in  committing  it  (a  ludicrous  absurdity),  or 
at  least  that  he  had  authorized  innocent  third  parties  so 
to  treat  him. 

Upon  the  hypothesis  of  the  plaintiff  in  error  which  we 
are  now  considering,  it  is  not  claimed,  nor  in  view  of  the 
facts  as  disclosed  by  the  record  can  it  be  claimed,  that  the 
person  making  the  alteration  had  any  authority,  nor  that 
the  maker  had  done  or  omitted  anything  to  induce  the 
belief,  that  he  had  authorized  any  subsequent  holder  to 
make  it,  nor  that  it  was  made  by  any  person  standing  in 
any  confidential  relation  to  or  held  out  as  such  by  him. 
The  whole  argument  goes  upon  the  assumption  that  the 
plaintiff  took  the  note  in  ignorance  that  any  alteration 
had  been  made.  The  argument  amounts  simply  to  this: 
That  by  the  maker's  awkwardness  or  negligence  his  note 
was  issued  by  him  in  a  shape  which  rendered  it  somewhat 
easier  for  another  person  to  commit  a  crime  than  if  he  had 
taken  the  precaution  to  erase  the  word  '  at,'  and  to  draw 
a  line  through  the  blank  Avhich  followed  it ;  and  that  a 
forgery  committed  by  filling  this  blank  would  be  less 
likely  to  excite  suspicion  than  if  committed  in  some  other 
way. 

But  how  such  a  crime,  whether  committed  in  this  or  in 
any  other  way,  could  create  a  contract  on  the  part  of  the 
maker  we  confess  ourselves  unable  to  comprehend ;  nor  are 


264         CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

we  satisfied  that  a  forgery  committed  in  this  way  woiild 
be  any  less  liable  to  detection  than  if  committed  in  many 
other  ways.  The  negligence,  if  such  it  can  be  called,  is  of 
the  same  kind  as  might  be  claimed  if  any  man,  in  signing 
a  contract,  were  to  place  his  name  far  enough  below  the 
instrument  to  permit  another  line  to  be  written  above  his 
name  in  apparent  harmony  with  the  rest  of  the  instrument; 
or,  as  if  an  instrument  were  written  with  ink,  the  material 
of  which  would  admit  of  easy  and  complete  obliteration  or 
fading  out  by  some  chemical  application  which  Avould  not 
affect  the  face  of  the  paper,  or  by  failing  to  fill  any  blank 
at  the  end  of  any  line  which  might  happen  to  end  far 
enough  from  the  side  of  the  page  to  admit  the  insertion 
of  a  word.  The  law  has  no  scale  by  which  to  measure  the 
various  degrees  of  facility  with  which  different  modes  of 
forgery  may  be  committed,  or  their  liability  to  suspicion 
or  detection;  and  we  see  no  clear  and  intelligible  distinc 
tion  by  which  we  could  hold  the  maker  in  this  case  bound 
by  this  forgery,  which  would  not  hold  all  persons  liable 
for  the  alteration  and  forgery  of  any  paper  signed  by  them. 
Whenever  a  party  in  good  faith  signs  a  complete  promis- 
sory note,  however  awkwardly  drawn,  he  should,  we  think, 
be  equally  protected  from  its  alteration  by  forgery  in 
whatever  mode  it  may  be  accomplished;  and  unless,  per- 
haps, when  it  has  been  committed  by  some  one  in  whom 
he  has  authorized  others  to  place  confidence  as  acting  for 
him,  he  has  quite  as  good  a  right  to  rest  upon  the  pre- 
sumption that  it  will  not  be  criminally  altered  as  any 
person  has  to  take  the  paper  on  the  presumption  that  it 
has  not  been ;  and  the  parties  taking  such  pajaer  must  be 
considered  as  taking  it  upon  their  own-  risk,  so  far  as  the 
question  of  forgery  is  concerned,  and  as  trusting  to  the 
character  and  credit  of  those  from  whom  they  receive  it, 
and  of  the  intermediate  holders. 

If  promissory  notes  were  only  given  by  first-class  busi- 
ness men  who  are  skilful  in  drawing  them  up  in  the  best 
possible  manner  to  prevent  forgery,  it  might  be  well  to 
adopt  the  high  standard  of  accuracy  and  perfection  which 


HOLMES   V.  TRUMPER.  265 

the  argument  in  behalf  of  the  plaintiff  in  error  would 
require.  But  for  the  great  mass  of  the  people  who  are 
not  thus  skilful,  nor  in  the  habit  of  frequently  drawing  or 
executing  such  paper,  such  a  standard  would  be  altogether 
too  high,  and  would  place  the  great  majority  of  men,  of 
even  fair  education  and  competency  for  business,  at  the 
mercy  of  knaves,  and  tend  to  encourage  forgery  by  the 
'  protection  it  would  give  to  forged  paper. 

We  have  thus  far  considered  the  question  involved  as 
one  of  principle  alone ;  and,  though  the  authorities  are  not 
uniform,  there  is,  we  think,  a  very  decided  preponderance 
in  favor  of  the  conclusion  at  which  we  have  arrived. 

Of  English  authority,  there  is  little  if  any  opposed  to 
the  view  we  have  taken.  It  is  sufficient  to  say  of  the 
cases  of  Payne  v.  Wylie  and  Graham  r.  Gillespie,  cited  in 
Ross  on  Bills  and  ISTotes,  p.  194  and  195,  that  but  one  of 
them  has  any  bearing  ujjon  the  question,  as  it  relates  to  a 
promissory  note,  and  that  nisi  prius  cases  and  others  which 
have  not  been  considered  of  sufficient  weight  to  secure  a 
place  in  the  regular  and  authorized  reports  can  be  of  little 
value  as  mere  authority. 

But  the  English  case  upon  which  the  plaintiff  in  error 
mainly  relies  is  that  of  Young  v.  Grote  et  al.,  4  Bing.  253. 
At  a  hasty  glance,  this  case  might  seem  to  support  the 
rule  for  which  it  is  cited;  but  a  careful  examination  will 
show  that  it  has  very  little  bearing  upon  the  precise  ques- 
tion involved  in  the  present  case.  That  was  the  case  of 
a  cheque  drawn  by  a  customer  upon  his  bankers.  The 
plaintiff,  Young,  having  occasion  to  be  absent,  left  with 
his  wife  certain  printed  cheques  upon  the  bankers,  signed 
by  him  in  blank,  to  be  filled  up  by  her  and  drawn  as  his 
business  might  require.  She  delivered  one  of  these 
cheques,  so  signed,  to  the  plaintiff's  clerk  to  be  filled  up  by 
him  with  the  sum  of  fifty  pounds  (and  some  shillings  and 
pence).  The  clerk  filled  out  the  cheque,  beginning  the 
word  '  fifty'  with  a  small  letter,  and  in  the  middle  of  the 
blank  line  left  for  the  sum,  and  showed  it  to  the  plaintiff's 
wife,  who  directed  him  to  draw  the  cash.     Before  present- 


266  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

ing  it  to  the  bankers,  this  clerk  altered  the  cheque  by 
inserting  before  the  word  '  fifty  '  the  words,  '  three  hun- 
dred and, '  thus  making  it  a  cheque  of  three  hundred  and 
fifty  instead  of  fifty  pounds,  all  in  the  same  handwriting, 
and  then  himself  presented  the  cheque  to  the  bankers,  and 
drew  the  whole  larger  sum.  The  action  against  the 
bankers  was  not,  of  course,  brought  by  Young  upon  the 
cheque,  but  for  the  money  which  he  claimed  had  been  paid 
out  by  the  bankers  without  authority.  Under  the  circum- 
stances stated,  the  court  held  the  plaintiff  was  not  entitled 
to  recover. 

Now,  there  are  several  features  or  elements  in  this  case 
which  distinguish  it  from  the  present,  and  upon  which  it 
is  quite  possible  that  case  may  be  supported  as  law  with- 
out giving  any  support  to  the  present  action. 

It  was  a  cheque  by  a  customer  upon  his  bankers,  who,  as 
depositaries  of  their  customers'  money,  were  hound,  from 
time  to  time,  to  pay  such  sums  as  the  latter  anight  order. 
They  were  under  obligation  to  pay  his  cheques  so  long  as 
his  money  was  in  their  hands  to  meet  them.  This  circum- 
stance is  made  prominent  in  the  opinion  of  Parke,  J. 
Now,  it  is  quite  clear  that  no  person  is  under  any  obliga- 
tion to  purchase  a  promissory  note,  nor,  consequently,  to 
decide  whether  the  paper  is  genuine  or  not. 

Another  very  important  circumstance  in  that  case  was 
that  the  cheque  was  filled  up  by  the  plaintiff's  clerk,  the 
alteration  made,  and  the  money  drav/n  by  him  in  person, 
and  the  plaintiff,  by  employing  1dm  as  he  did,  as  his  clerk, 
and  (through  his  wife),  as  his  agent  to  fill  the  cheque,  and 
in  person  to  draw  the  money  from  the  bankers,  might  well 
be  held  to  have  placed  a  confidence  in  him  for  Avhich  he 
should  be  responsible,  or  at  least  to  have  authorized  the 
bankers  to  place  confidence  in  him.  These  circumstances 
are  specially  relied  upon  by  Best,  C.  J.,  as  distinguishing 
the  case  from  that  of  Hall  v.  Fuller,  5  B.  &  C.  750,  which 
was  decided  directly  the  other  way. 

There  is,  however,  one  American  case  (Isnard  %u  Torres, 
10  La.  An.  103),  which  in  its  facts,  reasoning,  and  conclu- 


PRICE   V.  NEAL.  267 

sion  does,  as  to  a  promissory  note,  fully  sustain  the 
doctrine  contended  for  the  plaintiff  in  error. 

On  the  other  hand,  Worrall  v.  Gheen,  39  Penn.  St.  388, ^ 
is  a  Avell  considered  case,  similar  in  all  its  facts  to  the 
Louisiana  case,  and  involving  the  same  principles,  in 
whicli  the  Supreme  Court  of  Pennsylvania  reach  the  oppo- 
site conclusion,  the  same  at  which  we  have  arrived.  See 
also,  as  supporting  this  view,  Goodman  v.  Eastman,  4  N. 
H.  455,  and  Bruce  et  al.  v.  Westcott,  3  Barb.  374. 

We  see  no  ground  upon  which  the  defendant  below 
could  be  held  to  pay  the  amount  of  the  note,  as  originally 
drawn,  at  least  when  the  action  is  brought  upon  the  note 
itself,  without  departing  from  the  whole  theory  npon 
which,  at  common  law,  the  defence  rests,  which  is  that  the 
paper,  by  the  alteration  or  forgery,  is  rendered  void,  and 
does  not  constitute  a  contract  in  any  respect. 

There  was  no  error  in  the  ruling  of  the  Circuit  Court, 
and  the  judgment  must  be  affirmed  with  costs. 

The  other  justices  concurred. 


PRICE  V.  NEAL. 

King's  Bench  of  EnglUnd,  Michaelmas,  1762.     3  Burr.  1354. 

Tlie  drawee  of  a  bill  of  exchange  haviug  paid  the  same  to  a  bona  fide 
holder  for  value,  cannot  recover  back  the  money  as  paid  by  mistake,  on 
discovering  that  the  drawer's  signature  was  not  genuine. 

This  was  a  special  case  reserved  at  sittings  before  Lord 
Mansfield.  It  was  an  action  upon  the  case  brought  by 
Price  against  Neal,  wherein  Price  declares  that  the 
defendant  Neal  was  indebted  to  him  in  £80  for  money 
had  and  received  to  his  the  plaintiff's  use;  and  damages 
were  laid  at  £100.  The  general  issue  was  pleaded,  and 
issue  joined  thereon. 

It  was  proved  at  the  trial  that  a  bill  was  drawn  as  fol- 
lows :    '  Leicester,   22   November,    1760.      Sir,    six  weeks 

1  Ante,  p.  256. 


268  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

after  date  pay  Mr.  Rogers  Ruding  or  order  forty  pounds, 
value  received  for  INIr.  Thomas  Plouglifor;  as  advised  by, 
Sir,  your  humble  servant,  Benjamin  Sutton.  To  Mr.  John 
Price  in   Busli-lane,   Cannon-street,   London.'      Indorsed, 

*  R.  Ruding,  Antony  Topham,  Hammond  &  Laroche.  Re- 
ceived the  contents,  James  Watson  &  Son :  Witness  Edward 
Neal  ;  ' 

That  this  bill  was  indorsed  to  the  defendant  for  a  valu- 
able consideration,  and  notice  of  the  bill  left  at  the  plain- 
tiff's house  on  the  day  it  became  due.  Whereupon  the 
plaintiff  sent  his  servant  to  call  on  the  defendant,  to  pay 
him  the  said  sum  of  £40  and  take  up  the  said  bill,  which 
was  done  accordingly  ; 

That  another  bill  was  drawn  as  follows :  '  Leicester,  1st 
February,  1761.  Sir,  six  weeks  after  date  pay  Mr.  Rogers 
Ruding  or  order  forty  pounds,  value  received  for  Mr. 
Thomas  Ploughfor,  as  advised  by,  Sir,  your  humble  ser- 
vant, Benjamin  Sutton.  To  Mr.  John  Price  in  Bush-lane, 
Cannon-street,    London  ; '    that    this    bill   was    indorsed, 

*  R.  Ruding,  Thomas  Watson  &  Son.  Witness  for  Smith, 
Right  &  Co.  ; '  that  the  plaintiff  accepted  this  bill  by 
writing  on  it,  '  accepted,  John  Price;  '  and  that  the  plain- 
tiff wrote  on  the  back  of  it,  '  Messieurs  Freame  &  Barclay, 
pray  pay  forty  pounds  for  John  Price  ;  ' 

That  this  bill,  being  so  accepted,  was  indorsed  to  the 
defendant  for  a  valuable  consideration,  and  left  at  his 
bankers  for  payment,  and  was  paid  by  order  of  the  plaintiff 
and  taken  up. 

Both  these  bills  were  forged  by  one  Lee,  who  has  been 
since  hanged  for  forgery.  The  defendant  Xeal  acted  inno- 
cently and  bona  fide,  without  the  least  privity  or  suspicion 
of  the  said  forgeries  or  of  either  of  them,  and  paid  the 
whole  value  of  those  bills. 

The  jury  found  a  verdict  for  the  plaintiff,  and  assessed 
damages  £80  and  costs  40s.,  subject  to  the  opinion  of  the 
court  upon  this  question :  '  Whether  the  plaintiff,  under 
the  circumstances  of  this  case,  can  recover  back  from  de- 
fendant the  money  he  paid  on  said  bills  or  either  of  them.' 


PRICE   V.  NEAL.  269 

Loud  Maxsfield  stopped  Mr.  Yates  for  the  defendant, 
saying  that  this  was  one  of  those  cases  that  could  never  be 
made  plainer  by  argument. 

It  is  an  action  upon  the  case,  for  money  had  and  received 
to  the  plaintiff's  use;  in  which  action  the  plaintiff  cannot 
recover  the  money  unless  it  be  against  conscience  in  the 
defendant  to  retain  it,  and  great  liberality  is  always 
allowed  in  this  sort  of  action.  But  it  can  never  be  thought 
unconscientious  in  the  defendant  to  retain  this  money,  when 
he  has  once  received  it  upon  a  bill  of  exchange  indorsed  to 
him  for  a  fair  and  valuable  consideration,  which  he  had 
bona  fide  paid  without  the  least  j)rivity  or  suspicion  of  any 
forgery. 

Here  was  no  fraud,  no  wrong.  It  was  incumbent  upon 
the  plaintiff  to  be  satisfied  that  the  bill  drawn  upon  him 
was  the  drawer's  hand  before  he  accepted  or  paid  it;  but 
it  was  not  incumbent  upon  the  defendant  to  inquire  into  it. 
Here  was  notice  given  by  the  defendant  to  the  plaintiff  of 
a  bill  drawn  upon  him;  and  he  sends  his  servant  to  pay  it 
and  take  it  up.  The  other  bill  he  actually  accepts,  after 
which  acceptance  the  defendant  innocently  and  bona  fide 
discounts  it.  The  plaintiff  lies  by  for  a  considerable  time 
after  he  has  paid  these  bills,  and  then  finds  out  that  they 
were  forged  ;  and  the  forger  comes  to  be  hanged.  He 
made  no  objection  to  them  at  the  time  of  paying  them. 
Whatever  neglect  there  was,  was  on  his  side.  The  defend- 
ant had  actual  encouragement  from  the  plaintiff  himself 
for  negotiating  the  second  bill,  from  the  plaintiff's  having 
without  any  scruple  or  hesitation  paid  the  first  ;  and  he 
paid  the  whole  value,  bona  fide.  It  is  a  misfortune  which 
has  happened  without  the  defendant's  fault  or  neglect. 
If  there  was  no  neglect  in  the  plaintiff,  yet  there  is  no 
reason  to  throw  off  the  loss  from  one  innocent  man  upon 
another  innocent  man;  but  in  this  case,  if  there  was  any 
fault  or  negligence  in  any  one,  it  certainly  was  in  the 
plaintiff  and  not  in  the  defendant. 

Per  cur.  Rule  —  That  the  postea  be  delivered  to  the 
defendant. 


270  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

McKLEROY  v.  SOUTHERN  BANK  OF  KENTUCKY. 
Supreme  Court  of  Louisiana,  May,  1859.     14  La.  An.  458. 

The  acceptor  of  a  bill  of  exchange  is  not  estopped  to  show  that  the  sig- 
nature of  the  drawer  is  not  genuine,  against  a  holder,  though  for  vahie  in 
good  faith,  who  purchased  the  bill  before  it  was  accepted  or  known  by  the 
drawee  to  exist. 

The  case  is  cited  in  the  opinion. 

Land,  J.,  for  the  court.  —  The  evidence  in  this  case 
establishes  the  following  facts,  viz. : 

The  plaintiffs  were  the  factors  of  James  Smith,  a  cotton 

planter,    residing   in   the   State  of   Arkansas.     One  John 

Zimmer,  who  had  for  a  few  months  been  a  private  tutor 

in  Smith's  family,  assuming  the  name  of  John  Belmont, 

forged  a  draft  on  the  plaintiffs,  in  the  name  of  Smith,  as 

follows : 

'  Homestead,  November  5,  1857. 
'  1986. 

'  On  the  15th  December,  1857,  pay  to  the  order  of  John 

Belmont    nine    hundred    and    eighty-six    dollars,    value 

received,  and  charge  the  same  to  the  account  of 

Jas.  Smith. 

To  Messrs.  McKleroy  &  Bradford,  New  Orleans,  La.' 

Zimmer  also  forged  a  letter  of  introduction,  in  the  name 
of  Smith,  to  Shotwell  &  Son  of  Louisville,  Kentucky,  as 

follows : 

'  Homestead,  November  5,  1857. 
'  Messrs.  Shotwell  &  Son. 

'  Gentlemen: 

'  I  introduce  to  you  Mr.  John  Belmont,  a  gentleman  who 
has  resided  in  my  family  as  our  tutor.  Having  been  sick, 
he  is  now  travelling  to  improve  his  health.  I  gave  him  a 
draft  on  McKleroy  &  Bradford,  my  commission  house  in 
New  Orleans,  which  he  is  desirous  to  get  cashed  in  your 
city.     If  you  can  give  Mr.   Belmont  any  assistance,   by 


McKLEROY  v.   SOUTHERN  BANK  OF  KENTUCKY.  271 

perhaps  recommending  my  draft,  as  Mr.  Belmont  is  a 
stranger  in  your  city,  and  not  yet  fully  recovered,  you 
will  greatly  oblige  me. 

I  am,  gentlemen,  yours  respectfully, 

James  Smith,'. 

The  house  of  Shotwell  &  Son  had  been  iu  correspon- 
dence with  James  Smith  for  abo\it  twelve  years;  and  being 
deceived  by  the  forger  indorsed  the  draft  for  the  purpose 
of  enabling  the  holder  to  negotiate  it.  The  draft  bearing 
the  indorsements  of  John  Belmont  and  of  Shotwell  &  Son 
was  presented  for  discount  at  the  Branch  of  the  Southern 
Bank  of  Kentucky,  and  being  considered  good  was  pur- 
chased by  the  bank.  The  draft  was  remitted  to  the 
Louisiana  State  Bank,  with  the  following  additional 
indorsement  upon  it:  'Pay  to  R.  J.  Palfrey,  cashier,  J. 
B.  Alexander,  cashier.'  The  draft  thus  indorsed  was  pre- 
sented to  plaintiffs  for  acceptance  by  the  Louisiana  State 
Bank,  and  was  accepted  on  the  last  of  November,  or  first 
of  December,  and  was  paid  at  maturity,  on  the  eighteenth 
of  December,  1857,  by  the  plaintiffs  to  the  agent  of  the 
Southern  Bank  of  Kentucky.  In  January,  1858,  James 
Smith,  being  in  the  city,  made  known  to  the  plaintiffs, 
upon  an  examination  of  his  account  with  them,  that  the 
draft  was  a  forgery.  Mr.  Shotwell,  of  the  house  of  Shot- 
well  &  Son,  was  in  this  city  at  the  time,  and  was  immedi- 
ately sent  for,  and  the  fact  of  forgery  communicated  to 
him.  On  the  4th  of  January,  1858,  the  plaintiffs  gave 
formal  notice  by  letter  of  the  forgery  to  A.  L.  Shotwell  & 
Son,  to  the  Southern  Bank  of  Kentucky,  and  also  the 
Louisiana  State  Bank. 

This  suit  was  instituted  by  the  plaintiffs  to  recover  back 
the  money  paid  on  the  draft,  on  the  ground  of  payment  in 
error.  There  was  judgment  for  the  defendant,  and  the 
plaintiffs  have  appealed. 

The  district  judge  held  that  the  acceptance  of  a  bill  of 
exchange  admits  the  genuineness  of   the  drawer's  signa- 


272  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

ture,  and  that  where  an  acceptor  has  paid  to  a  bona  fide 
hohler  of  a  forged  draft  or  bill,  having  no  notice  of  the 
forgery,  he  cannot  recover  back  the  money  paid,  although  • 
the  forgery  is  established  by  the  most  conclusive  evidence. 
And  where  one  of  two  innocent  persons  must  suffer,  he 
who  has  misled  the  other,  or  has  omitted  his  duty,  must 
bear  the  loss. 

These  principles  of  law  are  well  established,  and  admit 
perhaps  of  neither  doubt  nor  controversy,  and  if  applicable 
to  this  case  must  determine  the  rights  of  the  parties. 

The  defendant  became  the  holder  of  the  draft  before  it 
ivas  accepted  by  the  plnintlffs,  and  before  they  had  any 
knowledge  of  its  existence,  and  consequently  before  the 
defendant  had  any  right  of  action  against  them  for  its 
recovery.  The  plaintiffs  therefore  had  done  no  act  which 
induced  the  defendant  to  believe  the  signature  of  the 
drawer  to  be  genuine,  at  the  time  the  bill  was  purchased. 
How  then  can  it  be  said  that  the  defendant  purchased  the 
bill  on  the  faith  of  the  plaintiffs'  acceptance,  or  on  their 
guaranty  ^  of  the  genuineness  of  the  drawer's  signature? 
Or  how  can  it  be  said  that  the  plaintiffs  misled  the  defend- 
ant at  the  time  of  the  purchase  of  the  bill,  or  was  then 
guilty  of  the  omission  of  any  duty  toward  the  defendant 
as  purchaser  of  the  bill? 

If  the  defendant  had  purchased  the  bill  on  the  faith  of 
the  acceptance  of  plaintiffs,  or  had  sustained  any  loss  in 
consequence  of  their  negligence,  we  would  have  no  diffi- 
culty in  affirming  the  judgment  of  the  lower  court  ;  but 
such  are  not  the  facts  made  known  to  us  by  the  record. 
The  defendant  purchased  the  bill  on  the  faith  of  the 
indorsement  of  Shotwell  &  Son,  which  was  a  warranty  of 
the  genuineness  of  the  drawer's  signature^  to  the  ban"k; 
and  there  is  no  good  reason  why  the  accidental  payment 
made  by  the  plaintiffs  should  inure  to  the  benefit  of  the 
defendant. 

Mr.    Chitty  says  on  this  subject  :   '  If   he  [the  holder] 

1  See  Bills  and  Notes  (Students'  Series),  76,  78. 


McKLEROY   v.  SOUTHERN  BANK   OF   KENTUCKY.      273 

thought  fit  to  rely  on  the  bare  representation  ^  of  the  party 
from  whom  he  took  it,  there  is  no  reason  that  he  shoukl 
profit  by  the  accidental  payment,  when  the  loss  had  already 
attached  upon  himself,  and  why  he  should  be  allowed  to 
retain  the  money,  when  by  an  immediate  notice  of  the 
forgery  he  is  enabled  to  proceed  against  all  other  parties 
precisely  the  same  as  if  the  payment  had  not  been  made, 
and  consequently  the  payment  to  him  has  not  in  the  least 
altered  his  situation,  or  occasioned  any  delay  or  prejudice. 
It  seems  that  of  late,  upon  questions  of  this  nature,  these 
latter  considerations  have  influenced  the  court  in  deter- 
mining whether  or  not  the  money  shall  be  recoverable 
back;  and  it  will  be  found,  on  examining  the  older  cases, 
that  there  were  facts  affording  a  distinction,  and  that, 
upon  attempting  to  reconcile  them,  they  are  not  so  contra- 
dictory as  might  on  first  view  have  been  supposed.'  Chitty 
on  Bills,  464.^ 

The  facts  in  this  case  afford  the  distinction  to  which 
Mr.  Chitty  refers,  and  take  the  case  out  of  the  general 
rule  which  prevents  the  acceptor  of  a  bill  of  exchange  from 
recovering  back  the  money  paid  in  cases  of  forgery  of  the 
drawer's  signature.  The  loss  had  already  attached  before 
the  bill  was  either  accepted  or  paid,  and  the  acceptors 
gave  immediate  notice  to  the  defendant,  and  Shotwell 
&  Son,  after  ascertaining  for  the  first  time,  from  James 
Smith,  in  whose  name  the  bill  was  drawn,  the  fact  of 
forgery. 

The  evidence  shows  that  plaintiffs  accepted  the  bill,  in 
the  language  of  the  witness,  '  chiefly  through  the  respect- 
ability of  the  channels  through  which  it  came.'  It  is 
therefore  difficult  to  conceive  upon  what  principle  of 
equity  or  right  the  defendant  can  be  permitted  to  retain 
the  money  paid  in  error  by  the  plaintiffs,  upon  the  facts  of 
this  case.  No  authority  applicable  to  the  particular  cir- 
cumstances of  this  case  has  been  cited  by  the  defendant's 

1  See  Bills  and  Notes  (Students'  Series),  76,  78. 

2  431,  12tli  Am.  ed. 

18 


274  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

counsel,  and  we  have  no  hesitation  in  reversing  the  judg- 
ment upon  the  authority  of  Mr.  Chitty,  above  quoted. 

In  a  case  like  the  present  the  acceptor  is  not  estopped 
from  proving  the  forgery. 

Judgment  for  the  plaintiffs. 


HORTSMAN  v.  HENSHAW. 

Supreme  Court  of  United  States,  December,  1850.     11  How.  177. 

The  acceptor  of  a  bill  of  exchange  cannot  recover  the  amount  thereof 
paid  to  a  bona  fide  holder,  if  the  drawer  put  the  bill  into  circulation  bear- 
ing a  forged  indorsement  of  the  payee's  name. 

The  case  is  stated  in  the  opinion  of  the  court. 

Taney,  C.  J.,  for  the  court.  —  The  material  facts  in 
this  case  may  be  stated  in  a  few  words.  Fiske  &  Bradford, 
a  mercantile  firm  in  Boston,  drew  their  bill  of  exchanc^e 
upon  Hortsman  of  London,  payable  at  sixty  days'  sight  to 
the  order  of  Fiske  &  Bridge,  for  six  hundred  and  forty- 
two  pounds  sterling.  The  drawers,  or  one  of  them,  placed 
the  bill  in  the  hands  of  a  broker,  with  the  names  of  the 
payees  indorsed  upon  it,  to  be  negotiated;  and  it  was  sold 
to  the  defendants  in  error  bona  fide  and  for  full  value. 
They  transmitted  it  to  their  correspondent  in  London,  and 
upon  presentation  it  was  accepted  by  the  drawee,  and  duly 
paid  at  maturity.  The  payees  and  indorsees  all  resided 
in  Boston,  where  the  bill  was  drawn  and  negotiated. 

It  turned  out  that  the  indorsement  of  the  payees  was 
forged,  — by  whom  does  not  appear;  and  a  few  months 
after  the  bill  was  paid,  the  drawers  failed  and  became 
insolvent.  The  drawee,  having  discovered  the  forgery, 
brought  this  action  against  the  defendants  in  error  to 
recover  back  the  money  he  had  paid  them. 

The  precise  question  which  this  case  presents  does  not 
appear  to  have  arisen  in  the  English  courts;  nor  in  any  of 
the  courts  of  this  country  with  the  exception  of  a  single 


HORTSMAN  v.  HENSHAW.  275 

case,  to  which  we  shall  hereafter  more  particularly  refer. 
But  the  established  principles  of  commercial  law  in  rela- 
tion to  bills  of  exchange  leave  no  difficulty  in  deciding  the 
question. 

The  general  rule  undoubtedly  is,  that  the  drawee  by 
accepting  the  bill  admits  the  handwriting  of  the  drawer 
but  not  of  the  indorsers  ;  and  the  holder  is  bound  to  know 
that  the  previous  indorsements,  including  that  of  the 
payee,  are  in  the  handwriting  of  the  parties  whose  names 
appear  upon  the  bill,  or  were  duly  authorized  by  them. 
And  if  it  should  appear  that  one  of  them  is  forged,  he 
cannot  recover  against  the  acceptor,  although  the  forged 
name  was  on  the  bill  at  the  time  of  the  acceptance.  And 
if  he  has  received  the  money  from  the  acceptor,  and  the 
forgery  is  afterwards  discovered,  he  will  be  compelled  to 
repay  it. 

The  reason  of  the  rule  is  obvious.  A  forged  indorse- 
ment cannot  transfer  any  interest  in  the  bill,  and  the 
holder  therefore  has  no  right  to  demand  the  money.  If 
the  bill  is  dishonored  by  the  drawee,  the  drawer  is  not 
responsible.  And  if  the  drawee  pays  it  to  a  person  not 
authorized  to  receive  the  money,  he  cannot  claim  credit 
for  it  in  his  account  with  the  drawer. 

But  in  this  case  the  bill  was  put  in  circulation  by  the 
drawers,  with  the  names  of  the  payees  indorsed  upon  it. 
And  by  doing  so  they  must  be  understood  as  affirming  that 
the  indorsement  is  in  the  handwriting  of  the  payees,  or 
written  by  their  authority.  And  if  the  drawee  had  dis- 
honored the  bill,  the  indorser  would  undoubtedly  have 
been  entitled  to  recover  from  the  drawer.  The  drawers 
must  be  equally  liable  to  the  acceptor  who  paid  the  bill. 
For  having  admitted  the  handwriting  of  the  payees,  and 
precluded  themselves  from  disputing  it,  the  bill  was  paid 
by  the  acceptor  to  the  persons  authorized  to  receive  the 
money,  according  to  the  drawer's  own  order. 

Now,  the  acceptor  of  a  bill  is  presumed  to  accept  upon 
funds  of  the  drawer  in  his  hands,  and  he  is  precluded  by 


276  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

his  acceptance  from  averring  the  contrary  in  a  suit  brought 
against  him  by  the  hokler.  The  rights  of  the  parties  are 
tlierefore  to  be  determined  as  if  this  bill  was  paid  by 
Hortsman  out  of  the  money  of  Fiske  &  Bradford  in  his 
hands.  And  as  Fiske  &  Bradford  were  liable  to  the 
defendants  in  error,  they  are  entitled  to  retain  the  money 
they  have  thus  received. 

We  take  the  rule  to  be  this:  Whenever  the  drawer  is 
liable  to  the  holder,  the  acceptor  is  entitled  to  a  credit  if 
he  pays  the  money;  and  he  is  bound  to  pay  upon  his 
acceptance,  when  the  payment  will  entitle  him  to  a  credit 
in  his  account  with  the  drawer.  And  if  he  accepts  with- 
out funds,  upon  the  credit  of  the  drawer,  he  must  look  to 
him  for  indemnity,  and  cannot  upon  that  ground  defend 
himself  against  a  bona  fide  indorsee.  The  insolvency  of 
the  drawer  can  make  no  difference  in  the  rights  and  legal 
liabilities  of  the  parties. 

The  English  cases  most  analogous  to  this  are  those  in 
which  the  names  of  the  drawers  or  payees  were  fictitious, 
and  the  indorsement  written  by  the  maker  of  the  bill. 
And  in  such  cases  it  has  been  held  that  the  acceptor  is 
liable,  although,  as  the  payees  were  fictitious  persons, 
their  handwriting  of  course  could  not  be  proved  by  the 
holder.  10  Barn.  &  Ores.  478.  The  American  case  to 
which  we  referred  is  that  of  Meacher  v.  Fort,  3  Hill  (S.  C). , 
227.  The  same  question  now  before  the  court  arose  in  that 
case,  and  was  decided  in  conformity  with  this  opinion. 

Another  question  was  raised  in  the  argument  upon  the 
sufficiency  of  the  notice;  and  it  was  insisted  by  the  coun- 
sel for  the  defendants,  that,  if  they  could  have  been  made 
liable  to  this  action  by  the  plaintiff,  they  have  been  dis- 
charged by  his  laches  in  ascertaining  the  forgery  and 
giving  them  notice  of  it. 

But  it  is  not  necessary  to  examine  this  question,  as  the 
point  already  decided  decides  the  case. 

The  judgment  of  the  Circuit  Court  is 

Affirmed  with  costs. 


MORRIS   V.  BETHELL.  277 


MORRIS   V.    BETHELL. 

Court  of  Common  Pleas  of  England,  Michaelmas,  18G9. 
L.  R.  5  C.  P.  47. 

The  fact  that  a  person  pays  one  bill  of  exchange  bearing  an  accept- 
ance purporting  to  be  his,  will  not,  as  matter  of  law,  estop  him  from  say- 
ing that  a  like  acceptance  of  a  later  bill  is  not  his  acceptance. 

Action  against  the  acceptor  of  a  bill  of  exchange  for 
£400,  dated  22d  of  July,  1868,  drawn  by  Richard  Bethell, 
payable  three  months  after  date,  and  indorsed  by  Bethell 
to  the  plaintiff.  Plea,  denial  of  the  alleged  acceptance. 
Issue  thereon. 

The  facts  were  as  follows:  In  Maj^,  1867,  the  plaintiff 
discounted  for  Richard  Bethell  a  bill  for  £300,  purporting 
to  be  drawn  by  Richard  Bethell  upon  the  defendant  and 
to  be  accepted  by  the  latter,  payable  at  his  bankers,  Coutts 
&  Co. ;  which  bill  was  at  its  maturity,  viz.,  on  the  5th  of 
August,  1867,  paid  by  Messrs.  Coutts  &  Co.,  by  authority 
of  the  defendant.  Upon  the  faith  of  the  former  bill  hav- 
ing been  duly  honored  by  the  defendant,  the  plaintiff  also 
discounted  for  Richard  Bethell  the  bill  declared  on.  The 
defendant  had  in  June  and  July,  1867,  before  maturity, 
paid  two  other  bills  similarly  drawn,  and  purporting  to  be 
accepted  by  him.  The  defendant,  who  was  called  as  a 
witness,  swore  that  all  these  acceptances  were  forgeries, 
that  the  acceptances  were  unauthorized  by  him,  and  that 
he  did  not  know  that  the  plaintiff  was  the  holder  of  the 
bill  for  £300  which  was  paid  in  August,  1867.  He  further 
stated  that  he  had  paid  the  former  bills  in  order  to  avert 
from  his  brother  the  consequences  of  his  act,  and  upon  his 
solemn  promise  that  it  should  not  be  repeated.  It  did  not 
appear  that  the  plaintiff  was  aware  of  the  payment  of  the 
two  bills  in  June  and  July,  1867,  or  that  he  made  any 
inquiry  before  he  took  the  bill  in  question. 

On  the  part  of  the  plaintiff  it  was  contended  that  the 
defendant  having  paid  the  bill  which  the  plaintiff  held  in 


278  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

August,  1867,  admitted  ^  thereby  that  the  acceptance  was 
genuine,  and,  in  the  absence  of  notice  to  the  plaintiff, 
was  estopped  from  denying  that  the  bill  declared  on  was 
accepted  by  him  or  with  his  authority. 

The  Lord  Chief  Justice,  though  pressed  by  the  Solicitor 
General,  2  on  behalf  of  the  defendant,  to  do  so,  refused  to 
nonsuit  the  plaintiff;  and  the  jury,  in  answer  to  questions 
left  to  them,  found  that  the  acceptance  to  the  bill  declared 
on  was  not  the  defendant's  signature,  nor  authorized  nor 
adopted  by  him;  that  he  did  not  know  that  the  plaintiff 
had  held  the  former  bill  of  August,  1867;  and  that  he  did 
not  lead  the  plaintiff  to  believe  that  the  acceptance  to 
the  bill  in  question  was  his  signature,  or  was  authorized 
by  him. 

A  verdict  was  thereupon  entered  for  the  defendant; 
leave  being  reserved  to  the  plaintiff  to  move  to  enter  a 
verdict  for  him  for  the  amount  of  the  bill  and  interest,  if 
the  court  should  be  of  opinion  that  the  Lord  Chief  Justice 
was  bound  to  hold,  as  matter  of  law,  that  upon  the  fore- 
going facts  the  plaintiff  was  entitled  to  a  verdict. 

BoviLL,  C.  J.  —  At  the  trial  the  plaintiff's  counsel  con- 
tended that  the  defendant  was  estopped  from  denying 
that  the  acceptance  to  the  bill  declared  on  was  his,  the 
Solicitor  General,  on  the  other  hand,  contending  that  I  ought 
to  nonsuit  the  plaintiff.  I  declined  to  withdraw  the  case 
from  the  jury,  because  I  thought  there  was  evidence  for 
them,  though  extremely  slight.  I  now  entertain  some  doubt 
whether  I  ought  to  have  left  the  case  to  the  jury  at  all. 
They,  however,  found  that  the  acceptance  in  question  was 
not  the  defendant's  signature,  nor  affixed  to  the  bill  with 
his  authority,  and  that  the  false  signature  was  not  adopted 
by  the  defendant ;  and  they  further  found  that  the  defend- 
ant (lid  not  know  that  the  plaintiff  was  the  holder  of  the 
£300  bill  paid  in  August,   1867.     With  reference  to   the 

1  Compare  Bills  and  Notes  (Students'  Series),  76,  78. 

2  Sir  John  Duke  Coleridge. 


MORRIS  V.  BETHELL.  279 

alleged  holding  out,  the  jury  also  found  that  the  defendant 
did  not  lead  the  plaintiff  to  believe  that  the  acceptance 
was  his  signature.  If  then  the  question  was  for  the  jury, 
it  has  been  decided  against  the  plaintiff. 

Mr.  Huddleston  now  insists  that  I  was  bound  to  rule,  as 
matter  of  law,  that  upon  the  facts  proved  the  plaintiff  was 
entitled  to  the  verdict ;  and  that  is  the  question  which  by 
consent  was  reserved  by  me  for  the  court.  I  am  of  opin- 
ion that  the  finding  of  the  jury  disposes  of  the  case.  The 
only  ground  upon  which  a  man  can  be  held  responsible  as 
the  acceptor  of  a  bill  signed  by  another  in  his  name  is, 
that  he  has  authorized  or  adopted  the  signature,  or  has  so 
conducted  himself  as  to  be  estopped  from  disputing  it. 
Now,  what  had  the  defendant  done  here  ?  He  had  on  a 
former  occasion  paid  a  bill  of  which  the  plaintiff  was  the 
holder,  which  had  been  similarly  accepted  in  his  name 
without  his  authority;  and  it  is  contended  that  he  thereby 
held  out  to  the  plaintiff  that  he  would  treat  as  genuine 
and  pay  all  bills  so  accepted.  There  was  no  evidence  that 
the  defendant  ever  knew  that  the  plaintiff  was  the  holder 
of  the  former  bill ;  and  the  plaintiff  seems  to  have  made 
no  inquiry  when  he  discounted  the  bill  in  question.  If  it 
were  made  to  appear  that  there  has  been  a  regular  course  of 
mercantile  business,  in  which  bills  have  been  accepted  by 
a  clerk  or  agent  whose  signature  has  been  acted  upon  as 
the  signature  of  his  principal,  there  would  be  evidence, 
and  almost  conclusive  evidence,  against  the  latter  that  the 
acceptance  was  written  by  his  authority.  That  was  the 
case  of  Barber  v.  Gingell,  3  Esp.  60.  It  would  have  been 
idle  to  contend  there  that  the  defendant  was  not  respon- 
sible for  the  signature.  The  report  is  short;  but  I  do  not 
understand  it  to  have  been  treated  as  matter  of  law,  but 
rather  as  a  conclusion  of  fact  by  the  jury.  Here  the  tran- 
saction was  not  one  of  a  mercantile  character;  there  was 
no  business  between  the  parties. 

What  then  does  the  payment  of   one  bill  under  such 
circumstances  hold  out?     Is  it  that,  as  matter  of  law,  the 


280  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

loarty  binds  himself  to  pay  all  further  bills  which  may 
assume  to  bear  his  acceptance,  whether  authorized  by  him 
or  not?  I  should  be  sorry  to  affirm  any  such  principle; 
and  I  think  no  jury  could  safely  act  upon  the  notion  of 
authority  or  adoption  under  such  circumstances.  The 
utmost  extent  of  the  doctrine,  as  it  seems  to  me,  is  that 
it  is  a  question  for  the  jury.  Indeed,  in  all  the  cases  cited 
by  Mr.  Huddleston  the  question  was  left  to  the  jury.^  If 
the  defendant  had  by  his  conduct  led  the  plaintiff  to  sup- 
pose that  the  acceptance  was  his  genuine  signature,  or  was 
authorized  by  him,  he  might  be  estopped  from  disputing 
it;  otherwise  not.  But  that  was  especially  a  question  for 
the  jury.  It  was  put  to  the  jur^-,  and  they  negatived  it, 
and,  as  I  think,  properly  negatived  it.  At  all  events  there 
was  no  evidence  upon  which  the  judge  would  have  been 
warranted  in  acting  upon  his  own  responsibility  and  hold- 
ing that,  as  m.atter  of  law,  the  plaintiff  was  entitled  to  a 
verdict.     The  rule  must  therefore  be  refused. 

WiLLES,  J. — I  am  of  the  same  opinion.  The  utmost 
extent  to  which  we  could  go  in  Mr.  Huddleston's  favor 
would  be  to  affirm  that  of  which  he  had  the  full  benefit  at 
the  trial.  The  matter  was  left  to  the  jury;  and  they  have 
decided  against  the  plaintiff.  One  who  pays  one  bill 
which  purports  to  bear  his  signature  as  acceptor  thereby 
makes  evidence  against  himself  that  the  person  who  wrote 
the  acceptance  did  so  with  his  authority;  and  if  the  bill  is 
given  in  a  course  of  business  implying  the  continuance  of 
such  authority,  it  may  be  conclusive  evidence.  That  is 
the  fullest  extent  to  which  it  is  jDOSsible,  consistently  with 
law,  to  affirm  the  propositions;  and  that  is  disposed  of  by 
the  findings  of  the  jury  in  this  case.  What  we  are  now 
asked  to  say  is,  that  although  authority  to  accept  and  any 

1  The  following  cases,  and  some  others,  were  cited  :  Barher  v.  Giugell, 
supra ;  Keane  r.  Rogers,  9  Barn.  &  C.  577,  .586  ;  Graves  v.  Key,  3  Barn. 
&  Ad.  31.3  ;  Pickard  ;•.  Rears,  6  Ad.  &  E.  469;  Gregg  v.  Wells,  10  Ad.  & 
E.  90;  Freeman  v.  Cooke,  2  Ex.  6.54  ;  Ryan  v.  Sams,  12  Q.  B.  460;  Corn- 
ish V.  Abington,  4  Hurl.  &  N.  549.  See  Bigelow,  Estoppel,  5th  ed.  pp. 
558,  559. 


MORRIS  V.  BETHELL.  281 

adoption  or  ratification  of  the  acceptance  be  negatived, 
and  although  there  has  been  no  course  of  business,  and 
nothing  to  show  any  continuance  of  autliority,  or  repre- 
sentation of  continued  authority,  to  accept  bills  in  his 
name,  the  payment  by  the  defendant  of  one  bill  which 
purports  to  bear  his  acceptance  affords  not  merely  evidence 
but  a  presumptio  juris  et  de  jure  which  cannot  be  contra- 
dicted, that  all  subsequent  bills  bearing  the  same  sort  of 
acceptance  are  authorized  by  him.  That  proposition  is 
neither  sanctioned  by  law  nor  is  it  in  accordance  with  com- 
mon sense.  In  the  absence  of  proof  of  any  authority  or 
adoption  or  course  of  business,  the  payment  of  the  bill  in 
August,  1867,  was  only  evidence  of  an  admission  by  the 
defendant  that  that  bill  was  accepted  by  him  or  by  some 
one  acting  under  or  authorized  by  him;  not  of  a  general 
authority  in  that  person  to  accept  bills  in  his  name.  The 
doctrine  of  estoppel  has  no  application  to  such  a  case.  It 
is  unnecessary  to  say  anything  as  to  the  payment  of  the 
other  bills,  to  which  the  plaintiff  was  no  party.  That  was 
left  to  the  jury.  I  entirely  agree  with  my  lord  that  there 
should  be  no  rule. 

Keating,  J.  —  I  am  of  the  same  opinion.  No  doubt 
a  man  who  pays  one  or  more  forged  acceptances  does  fur- 
nish some  evidence  against  himself  that  the  acceptance 
■was  authorized  by  him;  and  it  might  perhaps  be  said  that 
the  payment  by  the  defendant  to  the  plaintiff  of  the  bill 
which  became  due  in  August,  1867,  was  evidence  to  go  to 
the  jury  that  he  authorized  that  particular  acceptance.  I 
therefore  think  my  lord  was  right  in  leaving  the  matter  to 
the  jury.  That,  however,  does  not  suit  the  plaintiff's  pur- 
pose, because  the  whole  of  the  facts  were  left  to  the  jury, 
and  they  have  found  against  him.  He  now  seeks  to  con- 
tend that,  as  matter  of  law,  having  paid  one  forged  accept- 
ance in  the  hands  of  the  plaintiff,  the  defendant  binds 
himself  forever  unless  he  gives  notice,  and  cannot  be 
heard  to  say  that  he  did  not  authorize  the  acceptance  of  a 


282  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

subsequent  bill.  I  know  of  no  authority  which  at  ail 
approaches  an  affirmance  of  that  proposition;  and  I  agree 
with  my  brother  Willes  that  it  is  equally  opposed  to  law 
and  to  common  sense. 

Brett,  J.  i —  The  acceptance  in  question  was  not  the 
signature  of  the  defendant,  nor  was  it  authorized  by  him, 
nor  was  any  representation  made  by  him  with  regard  to 
this  particular  bill.  But  it  has  been  contended  that  by 
paying  the  former  bill  he  did  impliedly  represent  that  the 
acceptance  of  this  bill  was  authorized  by  him,  and  that, 
the  plaintiff  having  acted  upon  the  faith  of  that  implied 
representation,  the  defendant  is  estopped  from  denying  it. 
I  must  confess  I  have  grave  doubts  whether  there  was  any 
evidence  at  all  to  go  to  the  jury.  But  if  there  was,  the 
jury  have  disposed  of  it,  and  properly  I  think.  The  argu- 
ment in  effect  amounts  to  this,  that  if  a  man  by  payment 
once  authenticates  a  forged  acceptance,  he  is  bound  forever 
unless  he  gives  notice.  There  is  no  foundation  whatever 
for  such  a  proposition. 

Rule  refused. 

CAREIER  V.    SEARS. 

Supreme  Com-t  of  Massachusetts,  September,  1861.      4  Allen,  336. 

It  is  no  defence  that  the  holder  procured  an  indorsement  by  undue 
influence  from  the  payee,  when  he  was  of  unsound  mind  and  incapable  of 
making  a  valid  indorsement,  if  the  payee  or  his  legal  representatives  have 
never  disaffirmed  it. 

The  case  is  stated  in  the  opinion. 

Hoar,  J. ,  for  the  court.  —  This  action  is  by  the  indorsee 
of  a  promissory  note  against  the  maker;  and  the  defendant 
offered  to  prove  that  the  plaintiff  procured  the  indorse- 
ment by  undue  influence  from  the  payee,  when  he  was  of 
unsound  mind  and  incapable  of  making  a  valid   indorse- 

1  Now  Lord  Esher,  Master  of  the  Rolls. 


CARRIER  v.  SEARS.  283 

ment.  This  evidence  was  rejected,  and  we  think  it  ought 
not  to  have  been  admitted.  An  indorsement  is  a  contract ; 
and  the  contract  of  an  insane  person  or  one  obtained  by 
fraud  or  duress  is  voidable  and  not  void.  2  Bl.  Com. 
291  ;  2  Kent  Com.  (6th  ed.)  451  ;  Seaver  v.  Phelps,  11 
Pick.  304  ;  Allis  v.  Billings,  6  Met.  415  ;  Arnold  v. 
Eichmond  Iron  Works,  1  Gray,  434  ;  Gibson  v.  Soper,  6 
Gray,  279.  The  right  to  avoid  it  is  a  personal  right, 
which  can  only  be  exercised  by  the  insane  person,  or  his 
guardian,  or  representatives.  The  contract  is  binding 
upon  the  party  who  is  of  sound  mind,  and  his  rights  under 
it  are  not  affected  until  it  is  avoided  by  the  party  entitled 
to  disaffirm  it.     The  property  passes  as  to  third  persons. 

The  only  case  cited  by  the  defendant  upon  this  point  is 
Peaslee  v.  Bobbins,  3  Met.  164.  That  was  an  action  upon 
a  note  by  an  indorsee  against  the  promisor,  and  evidence 
was  offered  tending  to  prove  that  the  payee,  when  he 
indorsed  the  note,  had  not  sufficient  mental  capacity  to 
make  a  valid  transfer  of  it.  To  establish  this,  evidence 
was  admitted  as  to  his  incapacity  at  the  time  the  note  was 
made  to  him,  as  well  as  after  ;  and  the  admissibility  of 
this  evidence  was  the  question  raised  upon  the  bill  of 
exceptions.  This  court  held  that  it  was  admissible,  as 
tending  to  show  his  state  of  mind  at  the  time  he  indorsed 
it.  Whether  his  want  of  mental  capacity  was  a  defence 
of  which  the  defendant  could  avail  himself  does  not  appear 
to  have  been  questioned  by  either  party,  or  by  the  court. 
Judge  Wilde,  in  delivering  the  opinion,  says :  '  The  plain- 
tiff is  bound  to  show  a  legal  transfer  of  the  note  by  proof 
of  the  handwriting  of  the  indorser;  and  it  follows,  as  a 
necessary  consequence,  that  the  defendant  must  be  allowed 
to  impeach  the  plaintiff's  title  to  the  note  by  showing  that 
the  indorsement  was  void.  Evidence,  therefore,  of  the 
indorser' s  mental  incapacity  to  make  a  valid  contract,  at 
the  time  he  indorsed  the  note,  was  material  evidence ;  and 
not  the  less  material  because  the  same  incapacity  existed 
when  the  note  was  signed.'     These  remarks  of  the  learned 


284  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

judge,  unexplained,  would  certainly  countenance  the  posi- 
tion taken  by  the  defendant  in  the  case  at  bar;  and  the 
report,  as  it  stands,  does  not  afford  the  necessary  explana- 
tion. The  point  decided  was  only  that  evidence  of  insanity 
at  one  time  was  competent  as  tending  to  prove  insanity  at 
a  time  shortly  after.  But  the  fact  in  the  case  was,  as  I 
well  remember,  that  the  defendant  had  been  notified  by 
the  guardian  of  the  insane  payee  not  to  pay  the  note  to  the 
plaintiff  ;  and  the  defence  was  conducted  by  the  guardian 
for  the  benefit  of  his  ward.  We  have  examined  the  record, 
and  find  in  the  original  specification  of  defence  the  state- 
ment ^  that  said  Fletcher,  as  guardian  to  said  Parker  (the 
payee  of  the  note),  claims  said  note  as  the  property  or 
estate  of  said  Parker.'  There  was  no  controversy  upon 
this  point;  and  the  guardian  having  claimed  and  exercised 
the  right  to  disaffirm  and  avoid  the  indorsement,  the  only 
question  was  upon  the  mental  incapacity  of  the  payee  at 
the  time  the  indorsement  was  made.  The  language  of  the 
court  was  therefore  perfectly  warranted  in  its  application 
to  the  circumstances  of  the  case,  as  it  was  presented  and 
understood  by  the  parties,  but  would  require  limitation  if 
taken  as  the  enunciation  of  a  general  principle. 

Judgment  on  the  verdict. 


PEPvUVIAN   RAILWAYS   CO.    v.    THAMES   AND 
MERSEY   INSURANCE   CO. 

Court  of  Appeal  in  Chancery  of  England,  1867.     L.  R.  2  Ch.  617. 

The  power  of  a  corporation  to  execute  negotiable  bills  of  exchange 
turns  upon  the  powers  given  it  by  statute  ;  i  such  power  is  given  by  a  pro- 
vision that  the  corporation  may  do  whatever  it  thinks  incidental  or  con- 
ducive to  its  main  object. 

Appeal  from  two  orders  of  Malins,  V.  C,  one  refusing 
to  restrain  the  defendant  corporation  from  levying  execa- 

^  This  rule  is  not  laid  down  in  terms  in  the  case,  but  it  is  plainly  to  be 
inferred. 


PERUVIAN  RAILWAYS  CO.  v.  THAMES  INS.  CO.         285 

tion  upon  bills  of  exchange,  and  the  other  ordering  the 
plaintiff  corporation  to  be  wound  up  upon  the  petition  of 
the  former. 

[The  detailed  statement  of  facts  is  omitted,  as  it  is  now 
desired  merely  to  illustrate  the  powers  of  a  corporation 
to  execute  negotiable  instruments.  Considerable  portions 
of  the  opinion  of  the  court  are  omitted  for  the  same 
reason.] 

Lord  Cairxs,  L.  J.  —  The  question  raised  in  this  case 
is  one  of  considerable  importance,  and  the  case  would  be 
of  still  more  importance  if  we  were  to  entertain  the  opin- 
ion that,  under  the  Act  of  1862,  and  upon  the  construction 
of  that  act,  there  is  given  to  all  companies  incorporated 
by  it.  as  an  incident  of  their  incorporation,  the  power  of 
accepting  bills  of  exchange  or  issuing  negotiable  instru- 
ments. In  my  opinion  the  Act  does  not  give  that  power 
to  companies  as  an  incident  of  their  incorporation  under 
it,  but  leaves  the  power  of  a  company  so  incorporated,  with 
regard  to  negotiable  securities,  to  be  determined  upon  the 
proper  construction  of  the  memorandum  and  articles  of 
association.  There  may,  under  the  Act,  be  companies 
which  communicate  to  their  directors  the  power  to  bind 
the  shareholders  by  negotiable  instruments.  There  may 
be  companies  which  do  not  communicate  any  such  power. 
If  the  power  is  to  be  given  to  the  directors,  in  my  opinion 
it  must  be  given  by  the  inemorandum  and  articles  of 
association. 

The  question  therefore  in  this  case  is,  does  the  memo- 
randum, or  do  the  articles  of  association,  on  their  just  and 
proper  construction,  communicate  that  power?  .   .   . 

That  question  resolves  itself  into  two  points  :  First, 
the  power  of  the  company,  as  a  company,  with  regard  to 
negotiable  instruments;  and,  secondly,  the  right  of  the 
executive  to  exercise  the  power,  if  there  be  such  a  power 
in  the  company,  of  issuing  negotiable  securities. 

With  regard   to  the  power  of  the   company  itself,  the 


286  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

memorandum  of  association,  after  stating  the  object  of  the 
company  to  be  the  formation  of  a  '  societe  anonynie  '  in 
Peru  for  the  construction  of  railways  there,  continues  in 
these  words :  '  In  order  to  the  attainment  of  the  main 
object  of  the  company  they  may  do,  either  in  the  United 
Kingdom,  or  Peru,  or  elsewhere,  whatsoever  they  from 
time  to  time  think  incidental  or  conducive  thereto. '  Any- 
thing therefore  which,  in  the  opinion  of  the  company  .  .  . 
is  incidental  or  conducive  to  the  main  object  of  the  com- 
pany, which  was  the  acquisition  of  concessions  for  rail- 
ways, they  may  do.  If,  therefore,  there  comes  to  be  a 
concession  for  a  railway  which  is  to  be  paid  for  by  instal- 
ments, it  is,  I  think,  beyond  all  possibility  of  dispute 
that,  if  they  think  it  incidental  or  conducive  to  the  attain- 
ment of  the  concession,  when  the  instalments  become  or 
are  about  to  fall  due,  in  place  of  making  calls  on  their 
shareholders  they  should  give  a  bill  of  exchange,  payable 
at  a  future  day,  for  the  amount  of  the  instalments,  they 
may  do  so.  The  words  seem  to  me  to  be  so  wide  that 
they  necessarily  include  a  power  of  that  kind.  .  .  . 


BAYLEY  V.    TABER. 
Supreme  Court  of  Massachusetts,  May,  1809.     5  Mass.  286. 

Commercial  paper  declared  void  by  statute  is  void  even  iu  the  hands  of 
a  bona  fide  holder  for  value. 

The  declaration  in  this  action  contained  thirty-seven 
counts  upon  as  many  promissory  notes,  alleged  to  have 
been  made  by  the  defendants,  each  under  five  dollars,  pay- 
able to  bearer  on  demand  for  value  received,  and  bearing 
date  between  the  third  day  of  October  and  the  thirtieth 
day  of  December,  1804.     Plea,  the  general  issue. 

At  the  trial,  notes  comporting  with  the  several  counts 
were  produced  in  evidence,  all  bearing  the  impression  of 
plates,  types,  or  printing.     The  signature  of  the  defend- 


BAYLEY   V.  TABER.  287 

ants  to  all  of  them  was  admitted.  The  defendants  offered 
to  prove  that  some  of  the  notes  declared  on  were  in  fact 
made  and  issued  by  them  after  the  first  day  of  April,  1805, 
though  bearing  date  before  that  day;  and  that  the  notes 
which  had  been  so  made  were  antedated  by  them,  to  avoid 
the  operation  of  the  Statute  of  1804,  c.  58,  which  declares 
notes  of  the  like  description,  made  or  issued  after  that 
day,  to  be  utterly  void. 

Parker,  J.,  for  the  court.  — This  cause  was  tried  before 
me  at  the  sittings  after  the  last  law  term  in  Cumberland, 
in  May  last;  and  I  then  inclined  to  the  opinion  that  the 
defendants  should  not  be  permitted  to  allege  a  falsity  in 
an  instrument  made  and  signed  by  themselves,  and  which 
had  by  them  been  put  into  general  circulation  as  money. 
Notes  of  this  description,  under  the  denomination  of 
Taber's  notes,  to  a  large  amount,  having  become  a  common 
currency  in  the  district  of  Maine,  it  suddenly  struck  me 
as  inconsistent  with  the  common  principles  of  justice,  and 
the  policy  of  the  law,  that  the  promisors  in  those  notes 
should  be  allowed  to  avoid  payment  of  them  to  an  inno- 
cent holder,  by  alleging  that  they  bore  false  dates,  and  by 
showing  that  in  uttering  them  they  had  contravened  the 
laws  of  the  Commonwealth. 

I  therefore  rejected  the  evidence  offered;  but  very  soon 
after  the  trial,  having  revolved  the  question  in  my  mind 
at  more  leisure,  I  came  to  doubt  of  the  correctness  of  my 
opinion,  and  intimated  my  desire  to  the  counsel  that  the 
question  should  be  reserved  for  the  consideration  of  the 
whole  court.  This  was  done  in  such  manner  as  to  cause 
very  little  delaj^,  and  no  inconvenience  to  the  parties  or 
their  counsel;  it  having  been  agreed  that  the  question 
should  be  taken  up  by  the  court  at  this  adjourned  session, 
and  that  the  arguments  of  the  counsel  should  be  reduced  to 
writing,  and  transmitted  to  the  court. 

Upon  an  attentive  consideration  of  the  question,  and  of 
the  arguments  sent  to  us,  which  on  both  sides  are  concise 


288  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

and  perspicuous,  we  are  unanimously  and  clearly  of  opin- 
ion that  the  facts  proposed  by  the  defendants  to  be  proved 
to  the  jury  at  the  trial,  constitute  a  good  defence  against 
the  counts  to  which  those  facts  are  applicable,  and  that  it 
is  competent  to  the  defendants  in  this  action  to  set  up  and 
maintain  such  defence. 

The  Statute  of  1804,  c.  58,  §  1,  enacts  that  all  bills, 
notes,  cheques,  drafts,  or  obligations  whatsoever,  under  the 
amount  of  five  dollars,  payable  to  bearer  or  to  order,  shall 
be  wholly  in  writing;  and  that  all  notes,  etc.,  under  the 
aforesaid  amount,  and  payable  as  aforesaid,  which  should 
be  made  or  issued  after  the  first  day  of  April  then  next, 
and  which  should  bear  the  impression  of  types,  plates,  or 
printing,  should  be  utterly  void,  and  that  no  action  should 
be  thereon  sustained  in  any  court  of  law. 

The  second  section  of  the  same  statute  imposes  a  penalty 
upon  any  person  who  should  issue  or  pass  any  of  the  secu- 
rities described  in  the  first  section,  after  the  said  first  day 
of  April,  which  was  April,  1805. 

The  same  statute,  c.  134,  imposed  an  increased  penalty 
upon  any  person  who  should,  after  the  tenth  day  of  the 
same  April,  issue  or  pass  like  notes,  other  than  those  of 
incorporated  banks,  for  a  less  sum  than  five  dollars  or 
whereon  less  than  five  dollars  should  be  due,  with  intent 
that  the  same  should  be  circulated  as  currency. 

The  statute  first  cited  is  peremptory  and  unequivocal, 
in  enacting  that  all  notes  like  those  declared  on  in  this 
action,  made  or  issued  after  the  first  day  of  April,  1805, 
shall  be  utterly  void;  and  it  prohibits  the  sustaining  of 
any  suit  upon  them  in  any  court  of  law.  The  defendants 
say,  and  they  offered  to  prove,  that  some  of  the  notes  sued 
in  this  action  tvere  made  and  issued  after  that  day.  To 
reject  the  proofs  of  these  facts,  because  the  defendants  are 
the  original  promisors,  and  because  the  plaintiffs  may  be 
supposed  to  be  innocent  holders  of  the  notes  for  valuable 
considerations,  would  be,  to  all  intents  and  purposes,  to 
defeat  the  operation  of  the  statute,  and  would  amount  to  a 
judicial  repeal  of  an  act  of  the  legislature. 


BAYLEY   V.  TABER.  289 

The  maker  of  a  note  payable  to  bearer  is  generally  the 
only  person  to  be  called  upon  for  payment,  it  passing  from 
hand  to  hand,  on  the  credit  of  the  promisor's  name,  like 
bank-bills,  the  receiver  seldom  requiring  any  guaranty 
from  him  who  passes  it.  Now,  the  declared  object  of  the 
legislature  was  entirely  to  prevent  the  circulation  of  such 
paper.  But  if,  by  giving  a  fictitious  date  to  them,  the 
maker  is  prevented  from  showing  that  they  were  made  or 
issued  after  the  time  when  they  were  declared  by  the  stat- 
ute to  be  void,  they  would  continue  to  circulate,  as  long  as 
there  should  be  confidence  in  the  ability  of  the  makers  to 
pay  them. 

However  hard  the  operation  of  the  statute  may  appear  to 
be  against  persons  into  whose  possession  such  notes  may 
have  come  bona  fide  and  for  a  valuable  consideration,  it  is 
a  hardship  created  by  laAv  for  the  public  good,  and  the 
courts  of  law  are  prohibited  from  granting  any  relief 
against  it. 

iSTor  is  it  altogether  certain  that  the  receivers  of  such 
notes  are  free  from  blame,  although  not  privy  to  the  actual 
making  or  antedating  of  them.  The  laws  of  the  govern- 
ment are  presumed  to  be  known  by  all  the  citizens.  If 
the  notes  were  {?i  fact  made  or  issued  after  they  were 
declared  void  by  statute,  and  after  a  penalty  was  attached 
to  the  passing  of  them,  although  no  penalty  is  expressly 
enacted  against  the  receiver;  yet  the  act  of  receiving  was 
necessary  to  enable  the  offender  to  pass  them,  and  in  this 
view  the  receiver  may  be  considered  as  having  aided  in 
the  offence  of  passing.  Nor  is  it  improbable  that  the 
legislature  contemplated  the  punishment  of  the  receiver, 
when  they  took  from  him  all  power  of  coercing  payment  of 
such  notes  in  the  courts  of  law.  But  be  this  as  it  maj^, 
whether  the  plaintiffs  in  this  action  are  innocent  or  not,  to 
authorize  them  to  maintain  a  suit,  and  recover  judgment 
on  notes  of  this  description  so  situated,  when  the  legisla- 
ture has  declared  them  to  be  utterly  void,  would  be  effectu- 
ally to  annul  an  act,  the  wisdom  and  policy  of  which  the 
legislature  alone  had  the  right  to  determine. 

19 


290  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

Xor  is  it  a  novel  doctrine  that  a  person  shall  be  per- 
mitted to  avoid  his  contract  by  alleging  his  own  criminal- 
ity, provided  it  consists  in  the  violation  of  some  positive 
statute  of  the  government.  Contracts,  the  consideration 
of  which  is  money  won  at  play,  or  loaned  at  unlawful 
interest,  have  always  been  subject  to  the  same  rule,  not 
only  against  those  who  participated  in  the  offence,  but 
even  against  innocent  indorsees,  when  they  have  claimed 
the  performance  of  such  contracts. 

The  case  of  Lowe  v.  Waller,  2  Doug.  736,  shows  this 
long  to  have  been  the  law  in  England;  and  it  is  under- 
stood that  the  like  principle  has  been  uniformly  adopted 
and  practised  upon  by  the  courts  in  this  countr}'. 

It  has  been  suggested  b}^  the  counsel  for  the  plaintiffs  in 
the  close  of  their  argument  that,  to  make  this  a  good 
defence,  it  should  have  been  specially  jjleaded.  But  it  is 
not  necessary;  for  in  assumpsit,  everything  which  destroys 
the  right  of  action  may  be  given  in  evidence  under  the 
general  issue. 

Indeed,  there  seems  to  be  no  room  to  doubt  upon  this 
question;  and  nothing  but  a  reluctance  to  permit  a  man 
to  avail  himself  of  a  falsity  in  circulating  these  notes,  and 
afterwards  to  avoid  payment  by  showing  the  truth,  could 
have  caused  a  hesitation  at  the  trial. 

The  verdict  must  be  set  aside,  and  a 

New  trial  granted. 


STATE   CAPITAL  BANK   v.    TH(3:\rPS0N. 

Supreme  Court  of  New  Hampshire,  June,  1861.     42  N.  H.  369. 

A  negotiable  promissory  note  delivered  on  Sunday  is  valid  in  the  hands 
of  an  indorsee  for  value  without  notice. 

Assumpsit  against  the  makers  of  a  promissory  note  pay- 
able to  order  and  indorsed  by  the  payees  to  the  plaintiff. 
Agreed  facts :  The  note  was  not  dated  at  first,  but  the  date 


STATE   CAPTFAL   BANK  v.  THOMPSON.  2"Jl 

was  afterwards  inserted  by  the  payees  in  accordance  with 
agreement  made  Avhen  it  was  executed.  The  note,  though 
written  upon  a  week  day,  was  signed  and  delivered  to  the 
payees  on  Sunday.  The  phaintitf  bank  discounted  the  note 
for  value  and  without  notice. 

Nesmith,  J.,  for  the  court.  —  It  is  well  settled  that,  as 
between  the  original  parties  to  a  promissory  note,  the  de- 
fendant may  show  either  the  want  of  consideration  or  the 
illegality  of  it.  In  this  State,  under  the  construction  of 
our  statute  prohibiting  unnecessary  labor  on  Sunday,  the 
execution  and  delivery  of  a  promissory  note  upon  Sunday 
has  been  declared  '  business  of  a  person's  secular  calling,' 
and  generally  an  act  to  the  disturbance  of  others,  and  as 
such  is  prohibited  under  a  penalty,  and  when  subjected  to 
it  amounts  to  an  implied  prohibition  of  the  act  for  which 
the  penalty  is  inflicted.  Brackett  v.  Hoyt,  28  K  H.  267; 
Allen  V.  Deming,  14  N.  H.  133;  Smith  v.  Foster,  41  N. 
H.  215.  The  case  of  Allen  v.  Deming  was  founded  on  a 
promissory  note  originally  made  on  Sunday  and  indorsed 
to  the  plaintiff.  The  decision  is  based  upon  the  ground 
that  the  plaintiff  in  this  case  could  not  be  presumed  to  be 
or  treated  as  an  innocent  indorsee.  The  fact  is  here  found 
otherwise.  It  then  becomes  material  to  inquire  how  far 
the  negotiable  note  in  suit,  having  come  in  the  ordinary 
course  of  business  into  the  hands  of  a  bona  fide  holder  for 
a  valuable  consideration,  and  without  notice  of  any  defect 
in  the  same,  can  now  be  impeached  in  the  hands  of  the 
present  plaintiff. 

We  understand  that  the  rule  adopted  and  acted  upon  in 
England  is,  that  when  the  legislature  has  declared  that 
the  illegality  of  the  contract  or  the  consideration  shall 
make  the  note  absolutely  void,  the  defendant  may  set  up 
that  defence,  though  in  the  hands  of  a  bona  fide  holder. 
But  unless  it  has  been  so  expressly  declared  by  parlia- 
ment, illegality  of  consideration  will  be  no  defence  against 
a  bona  fide  holder  without  notice  and  for  a  valuable  con- 


292  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

sideration,  or  unless  the  note  be  obtained  after  it  became 
due  and  paj^able.  Lowe  v.  Waller,  2  Doug.  735;  Cliitty  on 
Bills,  58,  104,  and  cases  cited. 

This  rule  is  applied  to  cases  affected  by  usury,  and  to 
such  as  come  within  the  penalties  of  the  statutes  prohibit- 
ing gaming.  We  believe  the  New  York  and  Massachusetts 
courts  adhere  to  the  same  rule.  3  Kent's  Com.  44; 
Valette  v.  Parker,  6  Wend.  620;  Baker  v.  Arnold,  3 
Caines,  279;  Story  on  Bills,  222;  Bayley  on  Bills,  512- 
516,  The  same  principle  has  been  adopted  in  this  State 
where  the  sale  of  spirituous  liquors  has  been  prohibited 
by  penal  enactment.  In  Doe  v.  Burnham,  31  N.  H.  426, 
the  defence  was  that  the  note  in  suit  was  given  for  spiritu- 
ous liquors  sold  to  the  defendant  by  the  payee  of  the  note, 
contrary  to  the  statute,  etc.  But  it  having  been  shown 
that  the  plaintiff,  before  the  maturity  of  the  note,  took  it 
on  good  consideration  and  without  notice  of  any  illegality 
in  the  consideration  of  the  same,  the  defendant  was  refused 
the  right  to  set  up  this  defence.  Norris  v.  Langley,  19 
N.  H.  423;  Great  Falls  Bank  v.  Farmington,  41  N.  H. 
32.  So  also,  where  part  of  the  consideration  of  the  note 
is  illegal,  and  the  holder  occupies  the  position  of  an  inno- 
cent indorsee.  Clark  v.  Ricker,  14  N.  H.  44.  But  if  the 
notes  be  taken  when  overdue  or  dishonored,  the  illegality 
of  the  consideration  can  be  shown  as  matter  of  defence. 
Ayer  v.  Hutchins,  44  Mass.  370. 

The  statutes  for  the  observance  of  the  Lord's  day  and 
also  for  restraining  the  sale  of  sjiirituous  liquors  were 
doubtless  both  intended  for  the  welfare  and  security  of 
society  and  for  the  promotion  and  enforcement  of  good 
morals  and  right  conduct  in  the  community.  The  statutes 
are  both  penal  in  their  character,  and  similar  legal  conse- 
quences should  be  made  to  attach  to  their  violation.  In 
the  construction  and  application  of  these  statutes  to  con- 
tracts made  under  them  the  court  will  apply  like  rules  and 
exceptions.  We  agree  to  the  conclusion  of  Justice  Savage 
in  Valette  v.  Parker,  before  referred  to :  'It  is  all  import- 


GOODMAN  V.  HARVEY.  293 

ant  to  the  commercial  world  that  courts  do  not  go  in 
advance  of  the  legislature  in  rendering  negotiable  paper 
void  in  the  hands  of  an  innocent  indorsee.  Wherever  the 
statutes  declare  notes  void,  they  are  and  must  be  so  in  the 
hands  of  every  holder;  but  where  they  are  adjudged  by 
the  court  to  be  so  for  failure  or  the  illegality  of  considera- 
tion, they  are  void  only  in  the  hands  of  original  parties 
or  those  who  are  chargeable  with  or  have  had  notice  of 
the  illegality  of  the  consideration  therein  contained.'  We 
also  understand  our  conclusion  to  be  in  accordance  with 
the  recent  decision  of  the  court  in  the  case  of  Clarke  v. 
Pease,  41  K.  H.  414. 

Judgment  for  the  plaintiff. 


GOODMAI^   V.  HARVEY. 

King's  Bench  of  England,  Easter,  1836.     4  Ad.  &  E   870 

Gross  negligence  by  an  indorsee  in  the  purchase  of  a  negotiable  bill 
will  not  disentitle  him  to  claim  as  a  bona  fide  holder  for  value. 

Assumpsit  on  a  bill  of  exchange  drawn  by  the  defendants, 
payable  to  the  order  of  John  Scott,  indorsed  by  Scott,  and, 
later,  by  David  Levy  to  the  plaintiff.  The  first  count  al- 
leged non-acceptance,  the  second,  non-payment.  Plea,  non 
assumpsit. 

The  bill  was  given  by  the  defendants,  merchants  at 
Limerick,  to  Scott,  for  a  bahance  of  freight.  Scott  put  the 
bill  into  the  hands  of  one  Hudson  to  procure  a  discount  of 
it  for  him  (Scott),  and  Hudson  handed  it  to  Levy  for  the 
same  purpose.  The  drawees  refused  acceptance  in  conse- 
quence of  receiving  from  the  defendants  a  notice  warning 
them  not  to  pay  any  money  to  Scott,  as  the  party  giving 
notice  was  about  forthwith  to  sue  out  a  commission  of 
bankrupt   against    him.'      The    bill    was    noted    for    non- 

1  The  commission  afterwards  issued,  and  tliis  action,  it  was  understood, 
was  defended  by  Scott's  assignees. 


294  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

acceptance,  and  protested,  Xo  notice  of  tlie  non-accept- 
ance was  given  to  the  defendants.  Levy  now  returned  the 
bill  to  Hudson,  who  gave  it  back  to  Scott.  Scott  soon  after- 
wards gave  it  to  Hudson  again  to  obtain  a  discount  of  it. 
Hudson  now  placed  the  bill  as  before  in  the  hands  of  Levy, 
who,  before  maturity,  but  in  fraud  of  Scott,  indorsed  and 
procured  it  to  be  discounted  by  the  plaintiff.  Levy  re- 
tained the  proceeds,  and  had  never  given  value  for  the  bill. 

When  the  bill  became  due  the  plaintiff  presented  it  for 
payment,  and  payment  was  refused.  The  drawees  had 
funds,  but  the  right  to  the  proceeds  was  contested.  The 
funds  were  furnished  a  day  or  two  before ;  at  the  time 
of  non-acceptance  the  drawees  had  not  funds.  The  bill 
was  protested  for  non-payment,  and  notice  sent  to  the 
defendants. 

It  was  objected  for  the  defendants  that  the  plaintiff, 
in  taking  the  bill  from  Levy  with  the  notarial  marks 
upon  it,  had  been  guilty  of  gross  negligence,  and  there- 
fore took  the  bill  with  all  its  vices,  and  so  could  have 
no  better  right  to  recover  upon  it  than  Levy  himself,  who 
clearly  would  have  had  none.  The  Lord  Chief  Justice 
[Denman]  was  of  the  same  opinion,  observing  that  the 
plaintiff  had  received  the  bill  with  a  death-wound  ap- 
parent on  it.  The  jury,  in  answer  to  a  question  from 
the  Lord  Chief  Justice,  said  that,  in  their  opinion,  the 
notary's  marks  on  the  bill  were  sufficient  notice  to  an 
indorsee  of  non-acceptance. 

A  nonsuit  was  then  taken  ;  and  in  the  next  term  motion 
for  a  new  trial  was  made,  on  the  ground  that  the  ruling 
against  the  plaintiff  was  wrong;  that  the  bill  had  been 
lawfully  sent  into  the  market  by  Scott  while  not  yet  due ; 
and  that  the  plaintiff,  who  had  taken  it  before  maturity 
and  had  given  value  for  it,  had  a  right  to  recover  the 
amount,  notwithstanding  any  defect  in  the  title  of  an  in- 
termediate party.  A  rule  nisi  was  granted  ;  in  the  argu- 
ment of  which  it  was  urged,  and  conceded  b}-  the  court, 
that  the  defendants  were  not  entitled  to  notice  of  the 
non-acceptance. 


GOODMAN  V.  HARVEY.  295 

Lord  Denman,  C.  J.  —  The  question  I  offered  to  sub- 
mit to  the  jury  was  whether  the  plaintiff  had  been  guilty 
of  gross  negligence  or  not.  I  believe  we  are  all  of  opinion 
that  gross  negligence  only  would  not  be  a  sufficient  answer 
where  the  party  has  given  consideration  for  the  bill.  Gross 
negligence  may  be  evidence  of  mala  fides,  but  is  not  the 
same  thing.  We  have  shaken  off  the  last  remnant  of  the 
contrary  doctrine.  Where  the  bill  has  passed  to  the  plain- 
tiff Avithout  any  proof  of  bad  faith  in  him,  there  is  no 
objection  to  his  title.  The  evidence  in  this  case  as  to  the 
notarial  marks  could  only  weigh  as  rendering  it  less  likely 
that  the  bill  should  have  been  taken  in  perfect  good  faith. 
The  rule  must  be  absolute. 

Littledale,  Patteson,  and  Coleridge,  JJ.,  concurred. 

Rule  absolute. 

The  plaintiff  took  the  bill  with  notice,  in  the  notarial  marks, 
tliat  acceptance  had  been  refused ;  but  the  defendants  were  not 
entitled  to  notice  of  dishonor,  and  the  notarial  marks  did  not 
necessarily  suggest  that  the  defendants  had  any  other  defence  to 
the  bill  than  want  of  notice.  It  was  only  a  case  in  which  the 
marks  might  have  put  a  more  careful  man  upon  inquiry;  an  in- 
quiry which  might  have  led  to  a  discovery  of  the  fraud  on  Scott, 
thus  bringing  to  light  the  defence. 

Excepting  the  single  case  of  taking  in  bad  faith,  —  that  is,  where, 
in  case  of  an  equity,  the  taker  suspects  an  equity,  but  will  not  in- 
quire, - —  this  decision  leaves  nothing  of  the  doctrine  of  constructive 
notice  by  putting  upon  inquiry.  One  is  not  put  upon  inquiry  unless 
one  in  fact  suspects.  That  is  the  rule  in  England,  and  the  more 
general  rule  in  this  country.  But  a  few  of  our  courts  adhere  to  the 
doctrine  of  constructive  notice  to  the  full,  and  fix  upon  the  pur- 
chaser the  disability  of  notice  wherever  a  prudent  man  would  in- 
quire.    BiUs  and  Notes  (Students'  Series),  207-210. 


296  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

BAY  V.  CODDINGTON. 

Court  of  Chaucery  of  New  York,  1821.     5  Johns.  Ch.  54. 

A  creditor  receiving  a  negotiable  promissory  note  from  his  debtor,  sub- 
sequently to  the  creation  of  the  debt,  as  further  security,  does  not  become 
thereby  a  holder  for  value. 

The  plaintiff  being  owner  of  a  vessel,  employed  Randolph 
&  Savage,  defendants,  who  were  carpenters,  to  sell  her  ou 
a  credit,  and  take  good  notes  in  payment,  and  transmit  the 
same  to  him,  with  an  account  of  their  charges,  which  he 
would  pay.  R.  and  S.  sold  the  vessel  for  f  3,875,  and,  on 
the  3d  of  June,  1819,  received  the  notes  of  the  purchasers, 
payable  in  two,  three,  and  four  months,  some  of  them  being 
made  payable  to,  and  indorsed  by,  P.  Aymar  &  Co.,  and 
the  others  by  J.  R.  Stewart.  On  the  12th  of  June,  1819,  R. 
and  S.  delivered  the  notes  so  indorsed  to  the  defendants,  J. 
and  C.  Coddington,  who  were  at  that  time,  as  they  stated 
in  their  answer,  under  heavy  responsibilities  for  R.  and 
S.,  as  indorsers  of  notes  for  their  accommodation,  pay- 
able at  different  times,  but  all  subsequent  to  the  12th  of 
June,  1819,  which  they  were  afterwards  obliged  to  take 
up  as  they  fell  due,  amounting  to  $17,000.  The  answers 
admitted  that  R.  and  S.  had  stopped  payment,  when  the 
notes  so  held  by  them  were  to  be  delivered  to  J.  and  C. 
Coddington. 

The  defendants,  J.  and  C.  Coddington,  denied  all  knowl- 
edge of  the  manner  in  which  the  notes  had  come  to  the 
hands  of  R.  and  S.,  and  alleged  that  they  believed  that  they 
were  the  bona  fide  and  exclusive  property  of  R.  and  S. ; 
that  they  received  these  notes,  with  others,  as  a  guaranty 
and  indemnity,  as  far  as  they  would  avail," for  their  responsi- 
bilities ;  and,  three  days  after,  disposed  of  some  of  the 
notes  for  cash,  and  did  not  know,  until  several  days  after- 
wards, that  the  notes  belonged  to  the  plaintiffs,  as  stated  in 
the  bill.  They  admitted  that,  when  they  so  received  the 
notes,  R.  and  S.  were  not,  in  a  strict  legal  sense,  indebted 


BAY  V.  CODDINGTON.  297 

to  thein  ;  but  that  tliey  were  under  large  gratuitous  respon- 
sibilities for  them. 

No  proofs  were  taken,  and  the  cause  came  on  to  be  heard 
on  the  pleadings  only. 

Kent,  Chancellor.  —  It  is  admitted  that  Randolph  & 
Savage  held  the  notes  belonging  to  the  plaintiff,  which 
they  transferred  to  the  defendants,  J.  and  C.  Coddington, 
on  the  12th  of  June,  1819,  as  agents  or  trustees  for  the 
plaintiff,  and  that  they  had  no  authority  to  pass  them 
away.  It  was  a  gross  and  fraudulent  abuse  of  trust,  on 
the  part  of  K.  and  S.  The  only  question  now  is,  whether 
J.  and  C.  C.  are  entitled,  under  the  circumstances  disclosed, 
to  hold  the  notes,  and  retain  the  amount  of  them  as  against 
the  plaintiff. 

Negotiable  paper  can  be  assigned  or  transferred  by  an 
agent  or  factor,  or  by  any  other  person,  fraudulently^,  so 
as  to  bind  the  true  owner  as  against  the  holder,  provided 
it  be  taken  in  the  usual  course  of  trade,  and  for  a  fair  and 
valuable  consideration,  without  notice  of  the  fraud.  But 
the  defendants,  J.  and  C.  C,  have  not  entitled  themselves 
to  the  protection  of  holders  of  that  description.  The  notes 
were  not  negotiated  to  them  in  the  usual  course  of  busi- 
ness or  trade,  rior  in  payment  of  any  antecedent  and  exist- 
ing debt,  nor  for  cash,  or  property  advanced,  debt  created 
or  responsibility  incurred,  on  the  strength  and  credit  of 
the  notes.  They  were  received  from  R.  and  S.,  and  after 
they  had  stopped  payment,  and  had  become  insolvent 
within  the  knowledge  of  J.  and  C.  C,  and  were  seized 
upon  by  the  Coddingtons,  as  tabula  in  naufragio,  to  secure 
themselves  against  contingent  engagements,  previously 
made  for  R.  and  S.,  and  on  which  the}'  had  not  then 
become  chargeable.  There  is  no  case  that  entitles  such  a 
holder  to  the  paper,  in  opposition  to  the  title  of  the  true 
owner.  They  were  not  holders  for  a  valuable  consideration, 
within  the  meaning  or  within  the  policy  of  the  laAv. 

In  ]\Iiller  v.  Race,  1  Burr.  452,  a  bank-note  was  stolen, 


298  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

and  came  to  the  hands  of  the  plaintiff,  and  he  was  held 
entitled  to  it.  But  the  Court  of  King's  Bench  considered 
bank-notes  as  cash,  which  passed  as  money  in  the  way  of 
business;  and  the  holder,  in  that  case,  came  by  the  note 
for  a  full  and  valuable  consideration,  by  giving  money  in 
exchange  for  it,  in  the  usual  course  of  his  business,  and 
without  notice  of  the  robbery,  and  on  those  considerations 
he  was  entitled  to  the  amount  of  the  note.  So,  in  Grant 
V.  Vaughan,  3  Burr.  1516,  1  W.  Black.  785,  a  bill  of 
exchange,  payable  to  bearer,  was  lost,  and  the  finder  paid 
it  to  a  grocer  for  teas,  and  took  the  change.  There  the 
court  laid  stress  on  the  facts  that  the  holder  came  by  the 
bill  bona  fide,  and  in  the  course  of  trade,  and  for  a  full 
and  fair  consideration,  and  that,  though  he  and  the  real 
owner  were  equally  innocent,  yet  he  was  to  be  preferred, 
for  the  sake  of  commerce  and  confidence  in  negotiable 
paper.  Again,  in  Peacock  v.  Ehodes,  1  Doug.  633,  a  bill 
of  exchange,  with  a  blank  indorsement,  was  stolen  and 
negotiated  to  a  person  who  took  it  in  the  way  of  his  trade, 
for  cloth  sold  and  cash  for  the  balance,  and  he  was  held 
entitled  to  hold  it.  Lord  Mansfield  placed  reliance  on  the 
circumstance  that  it  was  received  in  the  course  of  trade. 
It  was  '  by  reason  of  the  course  of  trade,  which  creates  a 
property  in  the  assignee  or  bearer,'  that  Holt,  C.  J.,  1 
Salk.  126,  Anon.,  held,  that  the  owner  of  a  bank-bill, 
which  was  lost  and  transferred  by  the  finder  to  C.  for  a 
valuable  consideration,  could  not  maintain  an  action 
against  C.  It  will  not  be  necessary  to  go  further  in  sup- 
port of  the  principle  which  uniformly  pervades  the  cases 
upon  this  point,  and  I  shall  conclude  with  the  case  of 
Collins  V.  Martin,  1  Bos.  &  Pul.  648,  in  which  it  was 
decided  that,  if  bills  of  exchange,  indorsed  in  blank,  be 
deposited  with  a  banker,  to  be  received  when  due,  and  the 
banker  raises  money  on  them  by  pledging  them  to  C,  and 
then  becomes  bankrupt,  C.  could  not  be  sued  by  the  real 
owner,  as  he  took  them  innocently,  without  knowledge  of 
the  previous  circumstances.     But  it  is  to  be  observed  that 


BAY  V.  CODDINGTON.  299 

C.  there  advanced  money  to  the  banker,  on  the  credit  of 
the  bills;  and,  as  Eyre,  C.  J.,  observed  in  that  case:  '  If 
it  can  be  proved  that  the  holder  gave  no  value  for  the  bill, 
then,  indeed,  he  is  in  privity  with  the  first  holder,  and 
affected  by  all  that  will  affect  him.' 

In  short,  I  have  not  been  able  to  discover  a  case  in 
which  the  holder  of  negotiable  paper,  fraudulently  trans- 
ferred to  him,  was  deemed  to  have  as  good  a  title,  in  law 
or  equity,  as  the  true  owner,  unless  he  received  it  not  only 
without  notice,  but  in  the  course  of  business,  and  for  a 
fair  and  valuable  consideration  given  or  allowed  on  his 
part,  on  the  strength  of  that  identical  paper.  It  is  the 
credit  given  to  the  paper,  and  the  consideration  bona  fide 
paid  on  receiving  it,  that  entitles  the  holder,  on  grounds 
of  commercial  policy,  to  such  extraordinary  protection, 
even  in  cases  of  the  most  palpable  fraud.  It  is  an  excep- 
tion to  the  general  rule  of  law,  and  ought  not  to  be  carried 
beyond  the  necessity  that  created  it. 

I  shall  accordingly  declare,  that  the  defendants,  J.  and 
C.  Coddington,  are  not  entitled  to  the  notes  or  the  pro- 
ceeds thereof,  as  against  the  plaintiff,  who  was  the  lawful 
owner  of  them  when  they  were  transferred  to  those  defend- 
ants, inasmuch  as  they  did  not  receive  the  notes  in  the 
course  of  business,  nor  in  payment,  in  whole  or  in  part,  of 
any  then  existing  debt,  nor  for  cash  or  property  advanced 
or  debt  created  or  responsibility  incurred  on  the  credit  of 
the  notes.  And  I  shall  direct  that  it  be  referred  to  a 
master  to  compute  the  amount  of  the  said  notes,  with 
interest  thereon  from  the  times  they  were  respectively 
payable,  to  the  time  of  making  the  report;  and  that  all 
the  defendants  in  the  amended  bill,  or  some  or  one  of 
them,  pay  to  the  plaintiff  the  sum  that  shall  be  reported 
as  the  amount  of  the  said  notes,  with  interest,  as  afore- 
said, within  thirty  days  after  the  master  shall  have  made 
and  filed  his  report,  and  notice  thereof,  and  of  this  decree, 
or  that  the  plaintiff  may  have  execution  therefor,  against 
all  or  either  of  the  said  defendants,  according  to  the  course 
and  practice  of  the  court. 


300  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

And  it  is  further  ordered,  that  the  defendants,  E.  and 
S.,  pay  to  the  plaintiff  his  entire  costs  of  this  suit,  to  be 
taxed,  including  the  costs  of  the  original  bill,  and  that  the 
plaintiff  give  credit  upon  the  costs  so  to  be  taxed,  the 
charges  and  commissions  due  from  him  to  the  said  defend- 
ants, E.  and  S.,  upon  the  sale  of  the  vessel  in  the  plead- 
ings mentioned,  and  amounting  to  $96.87;  and  that  he 
have  execution  for  the  balance  of  costs,  after  such  deduc- 
tion, against  them,  the  said  E.  and  S.,  according  to  the 
course  and  practice  of  the  court.  And  it  is  further  ordered 
that  no  costs  be  taxed  or  allowed  to  the  plaintiff,  or  to 
the  defendants,  J.  and  C.  C,  as  against  each  other. 

Decree  accordingly.  ^ 


SWIFT  V.    TYSON. 

Supreme  Court  of  United  States,  January,  1842.     16  Peters,  1. 

The  bona  fide  holder  of  a  bill  of  exchange,  who  has  taken  it  before 
maturity  in  payment  of  or  security  for  -  a  pre-existing  debt,  without  notice 
of  any  equities  between  the  drawer  and  acceptor  thereof,  will  not  be  af- 
fected by  such  equities. 

The  case  is  stated  in  the  opinion  of  the  court. 

Story,  J,,  for  the  court. — This  cause  comes  before  us 
from  the  Circuit  Court  of  the  Southern  District  of  New- 
York,  upon  a  certiiicate  of  division  of  the  judges  of  that 
court. 

The  action  was  brought  by  the  plaintiff,  Swift,  as 
indorsee,  against  the  defendant,  Tyson,  as  acceptor,  upon 
a  bill  of  exchange,  dated  at  Portland,  ]\Iaine,  on  the  first 
day  of  May,  1836,  for  the  sum  of  $1,540.30,  payable  six 
months  after  date  and  grace,  drawn  by  one  Nathaniel 
Norton  and  one  Jairus   S.   Keith  upon  and  accepted   by 

^  This  case  was  affirmed  in  the  Court  of  Errors,  in  1822.    20  Johns.  637. 
2  See  Bills  and  Notes  (Students'  Series),  216,  note. 


SWIFT  V.  TYSON.  301 

Tyson,  at  the  city  of  New  York,  in  favor  of  the  order  of 
Nathaniel  Norton,  and  by  Norton  indorsed  to  the  plaintiff. 
The  bill  was  dislionored  at  maturity. 

At  the  trial,  the  acceptance  and  indorsement  of  the  bill 
were  admitted,  and  the  plaintiff  there  rested  his  case. 
The  defendant  then  introduced  in  evidence  the  answer  of 
Swift  to  a  bill  of  discovery,  by  which  it  appeared  that 
Swift  took  the  bill  before  it  became  due,  in  payment  of  a 
promissory  note,  due  to  him  by  Norton  and  Keith;  that 
he  understood  that  the  bill  was  accepted  in  part  payment 
of  some  lands  sold  by  Norton  to  a  company  in  New  York; 
that  Swift  was  a  bona  fide  holder  of  the  bill,  not  having 
any  notice  of  anything  in  the  sale  or  title  to  the  lands,  or 
otherwise,  impeaching  the  transaction,  and  with  the  full 
belief  that  the  bill  was  justly  due.  The  particular  cir- 
cumstances are  fully  set  forth  in  the  answer  in  the  record; 
but  it  does  not  seem  necessary  further  to  state  them.  The 
defendant  then  offered  to  prove  that  the  bill  was  accepted 
by  the  defendant  as  part  consideration  for  the  purchase  of 
certain  lands  in  the  State  of  jMaine,  which  Norton  and 
Keith  represented  themselves  to  be  the  owners  of,  and 
also  represented  to  be  of  great  value,  and  contracted  to 
convej'  a  good  title  thereto;  and  that  the  representations 
were  in  every  respect  fraudulent  and  false,  and  Norton  and 
Keith  had  no  title  to  the  lands,  and  that  the  same  were  of 
little  or  no  value.  The  plaintiff  objected  to  the  admission 
of  such  testimony,  or  of  any  testimony,  as  against  him, 
impeaching  or  showing  a  failure  of  the  consideration  on 
which  the  bill  was  accepted,  under  the  facts  admitted  by 
the  defendant,  and  those  proved  by  him,  by  reading  the 
answer  of  the  plaintiff  to  the  bill  of  discovery.  The 
judges  of  the  Circuit  Court  thereupon  divided  in  opinion 
upon  the  following  point  or  question  of  law:  Whether, 
under  the  facts  last  mentioned,  the  defendant  was  entitled 
to  the  same  defence  to  the  action  as  if  the  suit  Avas  between 
the  original  parties  to  the  bill,  that  is  to  say,  Norton,  or 
Norton  and  Keith,  and  the  defendant;    and  whether   the 


302  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

evidence  so  offered  was  admissible  as  against  the  plaintiff 
in  the  action.  And  this  is  the  question  certified  to  us  for 
our  decision. 

There  is  no  doubt  that  a  bona  fide  holder  of  a  negotiable 
instrument  for  a  valuable  consideration,  without  any  notice 
of  facts  which  impeach  its  validity  as  between  the  ante- 
cedent parties,  if  he  takes  it  under  an  indorsement  made 
before  the  same  becomes  due,  holds  the  title  unaffected  by 
these  facts,  and  may  recover  thereon,  although,  as  between 
the  antecedent  parties,  the  transaction  may  be  without  any 
legal  validity.  This  is  a  doctrine  so  long  and  so  well 
established,  and  so  essential  to  the  security  of  negotiable 
paper,  that  it  is  laid  up  among  the  fundamentals  of  the 
law,  and  requires  no  authority  or  reasoning  to  be  now 
brought  in  its  support.  As  little  doubt  is  there  that  the 
holder  of  any  negotiable  paper,  before  it  is  due,  is  not 
bound  to  prove  that  he  is  a  bona  fide  holder  for  a  valuable 
consideration,  without  notice  ;  for  the  law  will  presume 
that  in  the  absence  of  all  rebutting  proofs,  and  therefore 
it  is  incumbent  upon  the  defendant  to  establish  by  way  of 
defence  satisfactory  proofs  of  the  contrary,  and  thus  to 
overcome  the  prima  facie  title  of  the  plaintiff. 

In  the  present  case,  the  plaintiff  is  a  bona  fide  holder, 
without  notice,  for  what  the  law  deems  a  good  and  valid 
consideration,  that  is,  for  a  pre-existing  debt  ;  and  the 
only  real  question  in  the  cause  is,  whether,  under  the  cir- 
cumstances of  the  present  case,  such  a  pre-existing  debt 
constitutes  a  valuable  consideration  in  the  sense  of  the 
general  rule  applicable  to  negotiable  instruments.  We 
say  under  the  circumstances  of  the  present  case,  for  the 
acceptance  having  been  made  in  New  York,  the  argument 
on  behalf  of  the  defendant  is,  that  the  contract  is  to  be 
treated  as  a  New  York  contract,  and  therefore  to  be  gov- 
erned by  the  laws  of  New  York,  as  expounded  by  its 
courts,  as  well  upon  general  principles  as  by  the  express 
provisions  of  the  34th  section  of  the  Judiciary  Act  of 
1789,  c.  20.     And  then  it  is  further  contended  that,  by  the 


SWIFT  I'.  TYSON.  303 

law  of  New  York,  as  thus  expounded  by  its  courts,  a  pre- 
existing debt  does  not  constitute,  in  the  sense  of  the  gen- 
eral rule,  a  valuable  consideration  applicable  to  negotiable 
instruments. 

In  the  iirst  place,  then,  let  us  examine  into  the  decisions 
of  the  courts  of  New  York  upon  this  subject.  In  the  ear- 
liest case,  Warren  v.  Lynch,  5  Johns.  239,  the  Supreme 
Court  of  New  York  appear  to  have  held  that  a  pre-existing 
debt  was  a  sufficient  consideration  to  entitle  a  bona  fide 
holder  without  notice  to  recover  the  amount  of  a  note 
indorsed  to  him,  which  might  not,  as  between  the  original 
parties,  be  valid.  The  same  doctrine  was  affirmed  by 
Mr.  Chancellor  Kent,  in  Bay  v.  Coddington,  5  Johns. 
Ch.  54.^  Upon  that  occasion,  he  said  that  negotiable 
paper  can  be  assigned  or  transferred  by  an  agent  or  factor, 
or  by  any  other  person,  fraudulently,  so  as  to  bind  the 
true  owner  as  against  the  holder,  provided  it  be  taken 
in  the  usual  course  of  trade,  and  for  a  fair  and  valuable 
consideration,  without  notice  of  the  fraud.  But  he  added 
that  the  holders  in  that  case  were  not  entitled  to  the  bene- 
fit of  the  rule,  because  it  was  not  negotiated  to  them  in  the 
usual  course  of  business  or  trade,  nor  in  payment  of  any 
antecedent  and  existing  debt,  nor  for  cash,  or  property 
advanced,  debt  created,  or  responsibility  incurred,  on  the 
strength  and  credit  of  the  notes,  thus  directly  affirming 
that  a  pre-existing  debt  was  a  fair  and  valuable  considera- 
tion within  the  protection  of  the  general  rule.  And  he 
has  since  affirmed  the  same  doctrine,  upon  a  full  review  of 
it,  in  his  Commentaries.  3  Kent,  Com.  §  44,  p.  81.  The 
decision  in  the  case  of  Bay  v.  Coddington  was  afterwards 
affirmed  in  the  Court  of  Errors,  20  Johns.  637,  and  the 
general  reasoning  of  the  Chancellor  was  fully  sustained. 
There  were,  indeed,  peculiar  circumstances  in  that  case, 
which  the  court  seem  to  have  considered  as  entitling  it  to 
be  treated  as  an  exception  to  the  general  rule,  upon  the 
ground,  either  because  the  receipt  of  the  notes  was  under 

1  Ante,  p.  296. 


304  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

suspicious  circumstances,  the  transfer  having  been  made 
after  the  known  insolvency  of  the  indorser,  or  because  the 
holder  had  received  it  as  a  mere  security  for  contingent 
responsibilities,  with  which  the  holders  had  not  then 
become  charged.  There  was,  however,  a  considerable 
diversity  of  opinion  among  the  members  of  the  court  upon 
that  occasion,  several  of  them  holding  that  the  decree 
ought  to  be  reversed,  others  affirming  that  a  pre-existing 
debt  was  a  valuable  consideration,  sufficient  to  protect  the 
holders,  and  others  again  insisting  that  a  pre-existent  debt 
was  not  sufficient.  From  that  period,  however,  for  a  series 
of  years,  it  seems  to  have  been  held,  by  the  Supreme 
Court  of  the  State,  that  a  pre-existing  debt  was  not  a  suffi- 
cient consideration  to  shut  out  the  equities  of  the  original 
parties,  in  favor  of  the  holders.  But  no  case  to  that  effect 
has  ever  been  decided  in  the  Court  of  Errors.  The  cases 
cited  at  the  bar,  and  especially  Eosa  v.  Brotherson,  10 
Wend.  85,  The  Ontario  Bank  v.  Worthington,  12  Wend. 
593,  and  Payne  v.  Cutler,  13  Wend.  605,  are  directly  in 
point.  But  the  more  recent  cases.  The  Bank  of  Salina  v. 
Babcock,  21  Wend.  499,  and  The  Bank  of  Sandusky  v. 
Scoville,  24  Wend.  115,  have  greatly  shaken,  if  they  have 
not  entirely  overthrown,  those  decisions,  and  seem  to  have 
brought  back  the  doctrine  to  that  promulgated  in  the  ear- 
liest cases.  So  that,  to  say  the  least  of  it,  it  admits  of 
serious  doubt,  whether  any  doctrine  upon  this  question  can 
at  the  present  time  be  treated  as  finally  established;  and  it 
is  certain  that  the  Court  of  Errors  have  not  pronounced 
any  positive  opinion  upon  it.^ 

But,  admitting  the  doctrine  to  be  fully  settled  in  New 
York,  it  remains  to  be  considered  whether  it  is  obligatory 
\ipon  this  court,  if  it  differs  from  the  principles  established 
in  the  general  commercial  law.  It  is  observable  that  the 
courts  of  jSTew  York  do  not  found  their  decisions  upon  this 
point  upon  any  local  statute,  or  positive,  fixed,  or  ancient 
local  usage;  bat  they  deduce  the  doctrine  from  the  general 

1  But  see  Bills  and  Notes  (Students'  Series),  215. 


SWIFT  V.  TYSON.  305 

principles  of  commercial  law.  It  is,  however,  contended 
that  the  34th  section  of  the  Judiciary  Act  of  1789,  c.  20, 
furnishes  a  rule  obligatory  upon  this  court  to  follow  the 
decisions  of  the  State  tribunals  in  all  cases  to  which  they 
apply.  That  section  provides  '  that  the  laws  of  the  sev- 
eral States,  except  where  the  Constitution,  treaties,  or 
statutes  of  the  United  States  shall  otherwise  require  or 
provide,  shall  be  regarded  as  rules  of  decision  in  trials  at 
common  law  in  the  courts  of  the  United  States,  in  cases 
where  they  apply.'  In  order  to  maintain  the  argument,  it 
is  essential,  therefore,  to  hold  that  the  word  '  laws,'  in 
this  section,  includes  within  the  scope  of  its  meaning  the 
decisions  of  the  local  tribunals.  In  the  ordinary  use  of 
language,  it  will  hardly  be  contended  that  the  decisions  of 
courts  constitute  laws.  They  are,  at  most,  only  evidence 
of  what  the  laws  are,  and  are  not  of  themselves  laws. 
They  are  often  re-examined,  reversed,  and  qualified  by 
the  courts  themselves,  whenever  they  are  found  to  be 
either  defective,  or  ill-founded,  or  otherwise  incorrect. 
The  laws  of  a  State  are  more  usually  understood  to  mean 
the  rules  and  enactments  promulgated  by  the  legislative 
authority  thereof,  or  long-established  local  customs  having 
the  force  of  laws.  In  all  the  various  cases,  which  have 
hitherto  come  before  us  for  decision,  this  court  have  uni- 
formly supposed  that  the  true  interpretation  of  the  34th 
section  limited  its  application  to  State  laws  strictly  local, 
that  is  to  say,  to  the  positive  statutes  of  the  State,  and  the 
construction  thereof  adopted  by  the  local  tribunals,  and  to 
rights  and  titles  to  things  having  a  permanent  locality, 
such  as  the  rights  and  titles  to  real  estate,  and  other  mat- 
ters immovable  and  intraterritorial  in  their  nature  and 
character.  It  never  has  been  supposed  by  us  that  the 
section  did  apply,  or  was  designed  to  apply,  to  questions 
of  a  more  general  nature,  not  at  all  dependent  upon  local 
statutes  or  local  usages  of  a  fixed  and  permanent  opera- 
tion ;  as,  for  example,  to  the  construction  of  ordinary  con- 
tracts  or    other   written    instruments,    and   especially  to 

20 


306  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

questions  of  general  commercial  law,  where  the  State  tri- 
bunals are  called  upon  to  perform  the  like  functions  as 
ourselves,  that  is,  to  ascertain,  upon  general  reasoning  and 
legal  analogies,  what  is  the  true  exposition  of  the  contract 
or  instrument,  or  what  is  the  just  rule  furnished  by  the 
principles  of  commercial  law  to  govern  the  case.  And  we 
have  not  now  the  slightest  difficulty  in  holding  that  this 
section,  upon  its  true  intendment  and  construction,  is 
strictly  limited  to  local  statutes  and  local  usages  of  the 
character  before  stated,  and  does  not  extend  to  contracts 
and  other  instruments  of  a  commercial  nature,  the  true 
interpretation  and  effect  whereof  are  to  be  sought,  not  in 
the  decisions  of  the  local  tribunals,  but  in  the  general 
principles  and  doctrines  of  commercial  jurisprudence. 
Undoubtedly,  the  decisions  of  the  local  tribunals  upon 
such  subjects  are  entitled  to,  and  will  receive,  the  most 
deliberate  attention  and  respect  of  this  court;  but  they 
cannot  furnish  positive  rules,  or  conclusive  authority,  by 
which  our  own  judgments  are  to  be  bound  up  and  gov- 
erned. The  law  respecting  negotiable  instruments  ma}'  be 
truly  declared,  in  the  language  of  Cicero,  adopted  by  Lord 
Mansfield  in  Luke  v.  Lyde,  2  Burr.  882,  887,  to  be  in  a 
great  measure,  not  the  law  of  a  single  country  only,  but  of 
the  commercial  world.  '  Non  erit  alia  lex  Romse,  alia 
Athenis,  alia  nunc,  alia  posthac,  sed  et  apud  omnes  gentes, 
et  omni  tempore,  una  eademque  lex  obtinebit. ' 

It  becomes  necessary  for  us,  therefore,  upon  the  present 
occasion,  to  express  our  own  opinion  of  the  true  result  of 
the  commercial  law  upon  the  question  now  before  us.  And 
we  have  no  hesitation  in  saying  that  a  pre-existing  debt 
does  constitute  a  valuable  consideration,  in  the  sense  of 
the  general  rule  already  stated,  as  applicable  to  negotiable 
instruments.  Assuming  it  to  be  true  (which,  however, 
may  well  admit  of  some  doubt  from  the  generality  of  the 
language),  that  the  holder  of  a  negotiable  instrument  is 
unaffected  with  the  equities  between  the  antecedent  par- 
ties, of  which  he  has  no  notice,  only  where  he  receives  it 


SWIFT  V.  TYSON.  307 

in  the  usual  course  of  trade  and  business  for  a  valuable 
consideration,  before  it  becomes  due;  we  are  prepared  to 
say  that  receiving  it  in  payment  of,  or  as  security  for  a 
pre-existing  debt,  is  according  to  the  known  usual  course 
of  trade  and  business.  And  why,  upon  principle,  should 
not  a  pre-existing  debt  be  deemed  such  a  valuable  con- 
sideration? It  is  for  the  benefit  and  convenience  of  the 
commercial  world  to  give  as  wide  an  extent  as  practicable 
to  the  credit  and  circulation  of  negotiable  paper,  that  it 
may  pass  not  only  as  security  for  new  purchases  and 
advances  made  upon  the  transfer  thereof,  but  also  in  pay- 
ment of  and  as  security  for  pre-existing  debts.  The  credi- 
tor is  thereby  enabled  to  realize  or  to  secure  his  debt,  and 
thus  may  safely  give  a  prolonged  credit,  or  forbear  from 
taking  any  legal  steps  to  enforce  his  rights.  The  debtor 
also  has  the  advantage  of  making  his  negotiable  securities 
of  equivalent  value  to  cash.  But  establish  the  opposite 
conclusion,  that  negotiable  paper  cannot  be  applied  in 
payment  of,  or  as  security  for,  pre-existing  debts,  without 
letting  in  all  the  equities  between  the  original  and  ante- 
cedent parties,  and  the  value  and  circulation  of  such  secu- 
rities must  be  essentially  diminished,  and  the  debtor 
driven  to  the  embarrassment  of  making  a  sale  thereof, 
often  at  a  ruinous  discount,  to  some  third  person,  and  then 
by  circuity  to  apply  the  proceeds  to  the  payment  of  his 
debts.  What,  indeed,  iipon  such  a  doctrine,  would  become 
of  that  large  class  of  cases,  where  new  notes  are  given  by 
the  same  or  by  other  parties,  by  way  of  renewal  or  security 
to  banks,  in  lieu  of  old  securities  discounted  by  them, 
which  have  arrived  at  maturity?  Probably  more  than 
one-half  of  all  bank  transactions  in  our  country,  as  well  as 
those  of  other  countries,  are  of  this  nature.  The  doctrine 
would  strike  a  fatal  blow  at  all  discounts  of  negotiable 
securities  for  pre-existing  debts. 

This  question  has  been  several  times  before  this  court, 
and  it  has  been  uniformly  held  that  it  makes  no  difference 
whatsoever  as  to  the  rights  of  the  holder,  whether  the 


308  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

debt  for  which  the  negotiable  instrument  is  transferred  to 
him  is  a  pre-existing  debt,  or  is  contracted  at  the  time  of 
the  transfer.  In  each  case,  he  equally  gives  credit  to  the 
instrument.  The  cases  of  Coolidge  v.  Payson,  2  Wheat. 
66,  70,  73,  and  Townsley  v.  Sumrall,  2  Pet.  170,  182,  are 
directly  in  point. 

In  England,  the  same  doctrine  has  been  uniformly  acted 
upon.  As  long  ago  as  the  case  of  Pillans  and  Kose  v. 
Van  Mierop  and  Hopkins,  3  Burr.  1663,  the  very  point 
was  made,  and  the  objection  was  overruled.  That,  indeed, 
was  a  case  of  far  more  stringency  than  the  one  now  before 
us;  for  the  bill  of  exchange,  there  drawn  in  discharge  of 
a  pre-existing  debt,  was  held  to  bind  the  party  as  acceptor, 
upon  a  mere  promise  made  by  him  to  accept  before  the  bill 
was  actually  drawn.  Upon  that  occasion.  Lord  Mansfield, 
likening  the  case  to  that  of  a  letter  of  credit,  said  that  a 
letter  of  credit  may  be  given  for  money  already  advanced, 
as  well  as  for  money  to  be  advanced  in  future;  and  the 
whole  court  held  the  plaintiff  entitled  to  recover.  From 
that  period  downward,  there  is  not  a  single  case  to  be 
found  in  England,  in  which  it  has  ever  been  held  by  the 
court,  that  a  pre-existing  debt  was  not  a  valuable  consid- 
eration, sufficient  to  protect  the  holder,  within  the  mean- 
ing of  the  general  rule,  although  incidental  dicta  have 
been  sometimes  relied  on  to  establish  the  contrary,  such  as 
the  dictum  of  Lord  Chief  Justice  Abbott  in  Smith  v.  De 
Witts,  6  Dowl.  &  Ryl.  120,  and  De  la  Chaumette  v.  The 
Bank  of  England,  9  Barn.  &  Cress.  208,  where,  however, 
the  decision  turned  vipon  very  different  considerations. 

Mr.  Justice  Bayley,  in  his  valuable  work  on  Bills  of 
Exchange  and  Promissory  Notes,  lays  down  the  rule  in  the 
most  general  terms.  '  The  want  of  consideration,'  says 
he,  '  in  toto  or  in  part,  cannot  be  insisted  on,  if  the  plain- 
tiff, or  any  intermediate  party  between  him  and  the 
defendant,  took  the  bill  or  note  bona  fide  and  upon  a  valid 
consideration,'  Bayley,  Bills,  pp.  499,  500,  5th  London 
edition,  1830.     It  is  observable  that  he  here  uses  the  words 


SWIFT  V.  TYSON.  309 

*  valid  consideration, '  obviously  intending  to  make  the  dis- 
tinction, that  it  is  not  intended  to  apply  solely  to  cases 
where  a  present  consideration  for  advances  of  money  on 
goods  or  otherwise  takes  place  at  the  time  of  the  transfer 
and  upon  the  credit  thereof.  And  in  this  he  is  fully  borne 
out  by  the  authorities.  They  go  further,  and  establish 
that  a  transfer  as  security  for  past  and  even  for  future 
responsibilities,  will,  for  this  purpose,  be  a  sufficient, 
valid,  and  valuable  consideration.  Thus,  in  the  case  of 
Bosanquet  v.  Dudman,  1  Stark.  1,  it  was  held  by  Lord 
Ellenborough,  that  if  a  banker  be  under  acceptances  to  an 
amount  beyond  the  cash  balance  in  his  hands,  every  bill 
he  holds  of  that  customer's,  bona  tide,  he  is  to  be  cou- 
sidered  as  holding  for  value;  and  it  makes  no  difference, 
though  he  hold  other  collateral  securities  more  than  suffi- 
cient to  cover  the  excess  of  his  acceptances.  The  same 
doctrine  was  affirmed  by  Lord  Eldon  in  Ex  parte  Bloxham, 
8  Ves.  531,  as  equally  applicable  to  past  and  to  future 
acceptances.  The  subsequent  cases  of  Heywood  v.  Watson, 
4  Bing.  496,  and  Bramah  v.  Roberts,  1  Bing.  N.  C.  469, 
and  Percival  v.  Frampton,  2  Cromp.,  .Mees.,  &  Rose.  180,  are 
to  the  same  effect.  They  directly  establish  that  a  bona 
fide  holder  taking  a  negotiable  note  in  payment  of  or  as 
security  for  a  pre-existing  debt,  is  a  holder  for  a  valuable 
consideration,  entitled  to  protection  against  all  the  equi- 
ties between  the  antecedent  parties.  And  these  are  the 
latest  decisions  which  our  researches  have  enabled  us  to 
ascertain  to  have  been  made  in  the  English  courts  upon 
this  subject. 

In  the  American  courts,  as  far  as  we  have  been  able  to 
trace  the  decisions,  the  same  doctrine  seems  generally,  but 
not  universally,  to  prevail.  In  Brush  v.  Scribner,  11 
Conn.  388,  the  Supreme  Court  of  Connecticut,  after  an 
elaborate  review  of  the  English  and  New  York  adjudica- 
tions, held,  upon  general  principles  of  commercial  law, 
that  a  pre-existing  debt  was  a  valuable  consideration,  suffi- 
cie-nt  to  convey  a  valid  title  to  a  bona  fide  holder  against 


310  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

all  the  antecedent  parties  to  a  negotiable  note.  There  is 
no  reason  to  doubt  that  the  same  rule  has  been  adopted 
and  constantly  adhered  to  in  Massachusetts;  and  certainly 
there  is  no  trace  to  be  found  to  the  contrary.  In  truth ,  in 
the  silence  of  any  adjudications  upon  the  subject,  in  a  case 
of  such  frequent  and  almost  daily  occurrence  in  the  com- 
mercial States,  it  may  fairly  be  presumed  that  whatever 
constitutes  a  valid  and  valuable  consideration  in  other 
cases  of  contract,  to  support  titles  of  the  most  solemn 
nature,  is  held,  a  fortiori,  to  be  sufficient  in  cases  of  nego- 
tiable instruments,  as  indispensable  to  the  security  of 
holders  and  the  facility  and  safety  of  their  circulation.  Be 
this  as  it  may,  we  eijtertain  no  doubt  that  a  bona  fide 
holder  for  a  pre-existing  debt  of  a  negotiable  instrument, 
is  not  affected  by  any  equities  between  the  antecedent 
parties,  where  he  has  received  the  same  before  it  became 
due,  without  notice  of  any  such  equities.  We  are  all, 
therefore,  of  opinion,  that  the  question  on  this  point,  pro- 
pounded by  the  Circuit  Court  for  our  consideration,  ought 
to  be  answered  in  the  negative ;  and  we  shall  jiccordiugly 
direct  it  so  to  be  certified  to  the  Circuit  Court. 

Catkox,  J.,  said:  Upon  the  point  of  difference  between 
the  judges  below,  I  concur  that  the  extinguishment  of  a 
debt,  and  the  giving  a  ^jos^  consideration,  su.ch  as  the 
record  presents,  will  protect  the  purchaser  and  assignee  of 
a  negotiable  note  from  the  infirmity  affecting  the  instru- 
ment before  it  was  negotiated.  But  I  am  unwilling  to 
sanction  the  introduction  of  a  doctrine  into  the  opinion  of 
this  court,  aside  from  the  case  made  by  the  record,  or 
argued  by  the  counsel,  assuming  to  maintain  that  a  negoti- 
able note  or  bill,  pledged  as  collateral  security  for  a  pre- 
vious debt,  is  taken  by  the  creditor  in  the  due  course  of 
trade;  and  that  he  stands  on  the  foot  of  him  who  pur- 
chases in  the  market  for  money,  or  takes  the  instrument  in 
extinguishment  of  a  previous  debt.  State  courts  of  high 
authority  on  commercial  questions  have  held  otherwise; 


PATON  V.  COIT.  311 

and  that  they  will  yield  to  a  mere  expression  of  opinion  of 
this  court,  or  change  their  course  of  decision  in  conformity 
to  the  recent  English  cases  referred  to  in  the  principal 
opinion,  is  improbable;  whereas,  if  the  question  were  per- 
mitted to  rest  until  it  fairly  arose,  the  decision  of  it  either 
way  by  this  court  probably  would,  and  I  think  ought,  to 
settle  it.  As  such  a  result  is  not  to  be  expected  from  the 
opinion  in  this  cause,  I  am  unwilling  to  embarrass  myself 
with  so  much  of  it  as  treats  of  negotiable  instruments 
taken  as  a  pledge.  I  never  heard  this  question  spoken  of 
as  belonging  to  the  case  until  the  principal  opinion  was 
presented  last  evening;  and  therefore  I  am  not  prepared  to 
give  any  opinion,  even  was  it  called  for  by  the  record. 


PATOX   V.    COIT. 

Supreme  Court  of  Michigan,  October,  1858.     5  Mich.  505. 

Whenever  the  consideration  of  negotiable  paper  between  the  original 
parties  has  been  iUegal,  especially  if  it  is  as  to  them  in  violation  of  a  posi- 
tive prohibition  of  statute,  proof  of  such  illegality  throws  upon  the  in- 
dorsee the  burden  of  proving  that  he  took  it  bona  fide  and  gave  value 
for  it. 

Assumpsit  against  the  acceptors  of  a  bill  of  exchange 
given  for  iutoxicatng  liquors  sold  in  violation  of  the  Pro- 
hibitory Liquor  Law,  which  makes  such  paper  '  utterly 
null  and  void  against  all  persons,  and  in  all  cases,  except- 
ing only  as  against  the  holders,  .  .  ,  who  may  have  paid 
therefor  a  fair  price,  and  received  the  same  upon  a  valu- 
able and  fair  consideration,  without  notice  or  knowledge  of 
such  illegal  consideration.'  The  plaintiffs  were  indorsees 
of  the  payees. 

On  the  trial,  the  acceptance  having  been  given  in  evi- 
dence, the  plaintiff  rested.  The  defendant  then  introduced 
a  witness,  and  being  required  to  state  what  he  expected  to 
prove  by  such  witness,  stated  that  he  expected  to  prove 
that  such  acceptance  was  given  in  payment  and  as  security 


312  CASES   ON  BILLS,  NOTES,  AND  CHEQUES. 

for  ten  barrels  of  intoxicating  liquor,  called  whiskey,  pur- 
chased by  defendant,  of  the  drawers  of  said  draft,  on  the 
thirtieth  day  of  March,  1857,  in  Detroit. 

The  plaintiffs  objected  to  such  evidence,  upon  the  ground 
that  under  the  exception  in  section  two  of  the  Prohibitory 
Liquor  Law  of  1855,  the  presumption  was  that  said  draft 
was  in  the  hands  of  bona  fide  holders,  to  wit,  the  plain- 
tiffs; and  that  the  onus  was  on  the  defendant  to  show, 
or  propose  to  show,  notice  before  said  testimony  could  be 
received.  The  court  sustained  the  objection,  and  refused 
to  allow  the  testimony  to  be  given;  and  defendant 
excepted. 

Judgment  having  been  rendered  for  plaintiffs  below,  for 
the  amount  of  the  acceptance,  the  defendant  brought  the 
case  to  this  court  by  writ  of  error. 

Chkistiancv,  J.,  for  the  court.  — Whether  the  evidence 
in  this  case  was  properly  rejected,  does  not  depend  upon 
the  question.  Whether,  standing  alone,  it  would  have 
constituted  a  complete  defence  against  the  draft  in  the 
hands  of  a  bona  fide  holder  for  value;  but,  Whether  it 
would  have  been  sufficient  to  throw  upon  the  plaintiff  the 
burden  of  proving  himself  to  be  such  bona  fide  holder;  or. 
Whether,  in  fact,  the  evidence  tended,  prima  facie,  to 
establish  a  defence. 

It  is  assumed  by  the  counsel  for  the  defendants  in  error 
(plaintiffs  below)  that  the  only  effect  of  the  statute  in 
reference  to  negotiable  paper  given  for  liquors  sold,  '  is  to 
render  such  paper  without  consideration  as  between  the 
immediate  parties,'  and  that  '  the  effect  of  the  exception  in 
section  two  is  simply  to  put  this  statute  equity  on  a  foot- 
ing with  all  other  equities,  between  the  original  parties  to 
negotiable  paper. 

If  this  be  the  only  effect  of  the  statute,  then,  according 
to  the  prevailing  current  of  recent  decisions,  the  evidence 
was  properly  rejected,  though  the  cases  upon  this  point 
are  by  no  means  uniform;  and  we  do  not  wish  to  be  under- 


PATON  V.  COIT.  313 

stood  as  giving  any  opinion  upon  the  question  presented 
by  this  hypothesis,  as  we  do  not  think  it  involved  in  the 
present  case. 

The  defence  here  proposed  was  not  merely  the  ivant, 
but  the  illegality  of  consideration ;  and  this  being  allowed 
as  a  defence  between  the  original  parties,  irrespective  of 
and  even  contrary  to  the  equities  of  the  parties,  cannot, 
without  perversion  of  language,  be  called  an  equity.  It 
is  not  on  the  defendants'  account  that  such  a  defence  is 
allowed,  as  will  more  fully  appear  in  the  sequel. 

The  effect  of  the  statute  in  question  is  not  merely  to 
render  such  paper  without  consideration,  but  absolutely 
void  and  illegal,  between  the  immediate  parties,  and  all 
others  who  have  not  obtained  it  for  value,  and  without 
notice,  —  not  only  void  in  the  negative  sense  of  having  no 
legal  basis,  but  affirmatively  illegal  as  violating  the  posi- 
tive provisions  of  the  statute.  It  was  not  even  contended 
that  the  facts  offered  to  be  shown  by  the  defendant  would 
not  have  made  a  prima  facie  case  of  an  illegal  sale,  with- 
out showing  that  the  sale  did  not  come  within  any  of  the 
exceptions  of  the  statute;  and  if  the  plaintiffs  claimed  to 
maintain  the  validity  of  the  sale  under  any  such  exception, 
the  burden  of  proof  (this  being  a  civil  case)  rested  upon 
them  to  bring  it  within  the  exception. 

Now,  upon  principle,  as  a  question  of  statute  construc- 
tion, and  without  reference  to  any  authority,  when  the 
statute  expressly  declares  all  such  paper  void"  and  illegal, 
and  forbids  any  action  to  be  brought  or  maintained  upon 
it,  '  except  when  brought  by  a  bona  fide  holder  who  has 
received  the  same  upon  a  valuable  and  fair  consideration 
without  notice  or  knowledge,'  etc,  it  would  seem  to  follow 
as  a  logical  necessity,  that  when  the  paper  is  shown  to 
have  been  given  for  such  illegal  consideration,  the  plain- 
tiff's right  of  recovery  is  cut  off  by  the  general  prohibition 
of  the  statute,  unless,  in  avoidance  of  this,  he  gives  evi- 
dence of  those  facts  which  alone  can  bring  him  within  the 
exception. 


314  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

We  do  not  propose  to  give  a  definite  opinion  upon  the 
point,  whether,  the  illegality  being  first  shown,  the  burden 
of  proof  in  this  case  would  have  rested  upon  the  plaintiffs 
to  show  actual  want  of  notice;  this  might  be  requiring 
actual  proof  of  a  negative.  But  we  are  inclined  to  the 
opinion  that  they  should  have  shown  the  nature  of  the 
transaction  accompanying  the  transfer;  and  if  that  dis- 
closed no  suspicion  of  such  notice,  it  might  make  a  prima 
facie  case  of  want  of  notice,  and  throw  upon  the  defendant 
the  burden  of  proving  notice.  But  the  amount  of  the  con- 
sideration given  by  the  plaintiff  is  distinct  from  the  ques- 
tion of  notice,  and  the  absence  of  such  consideration,  in 
such  a  case,  would  be  a  defence,  though  the  paper  had 
been  taken  by  the  plaintiff  without  notice.  The  amount 
of  consideration  given  by  the  plaintiff  is  an  affirmative 
fact  peculiarly  within  his  own  knowledge,  and  not  gene- 
rally in  that  of  the  defendant,  and  being  necessary  to  bring 
the  plaintiff's  case  within  the  exception  of  the  statute, 
should  be  proved  by  him.  To  allow  him  to  recover  with- 
out such  proof  would  be  an  evasion  of  the  statute.  Such 
proof  (the  illegality  being  first  shown)  is  a  necessary  part 
of  the  plaintiff's  case,  without  which  he  shows  no  prima 
facie  right  to  recover;  and  though,  in  ordinary  cases,  this 
fact  would  be  presumed  in  favor  of  the  holder,  this  pre- 
sumption can  never  be  allowed  without  proof  when  the 
paper  was  absolutely  void  between  the  original  parties, 
on  the  ground  of  fraud,   illegality,  or  duress. 

This  construction  of  the  statute  is  sustained  by  authority. 
In  England,  by  the  statute  of  Anne,  a  note  or  bill  given  or 
indorsed  upon  a  usurious  consideration  was  void,  even  in 
the  hands  of  a  bona  fide  holder  for  value.  Chitty,  Bills, 
9  Am.  ed.,  110.  But  the  Stat.  58  Geo.  III.  c.  93  made 
such  note  valid  in  the  hands  of  a  bona  fide  holder  for  value 
without  notice.  In  the  case  of  Wyat  v.  Campbell,  Mood. 
&  M.  80,  where  the  note  had  been  indorsed  by  a  previous 
indorser,  upon  a  usurious  consideration,  and  no  notice 
given  to  plaintiff  to  prove  consideration,  it  was  contended 


PATON  V.  COIT.  315 

that  the  plaintiff  was  not  bound  to  prove  it.  But,  by  Lord 
Tenterden,  C.  J. :  '  The  statute  58  Geo.  III.  c.  93  makes 
a  note  tainted  with  usury  valid  in  the  hands  of  a  bona  fide 
holder.  The  onus  is,  therefore,  upon  the  holder  to  prove 
he  is  such,  otherwise  the  statute  does  not  apply,  and  the 
note  is  void  under  the  statute  of  Anne.' 

In  that  case,  it  is  true,  the  exception  was  in  a  subse- 
quent statute ;  here  it  is  in  the  same  statute ;  but  we  are 
unable  to  perceive  how  this  can  make  any  difference  as  to 
the  burden  of  proof.  If  the  fact  was  not  to  be  presumed 
in  that  case,  it  cannot  be  in  this. 

But  whether  this  conclusion  be  right  or  wrong  as 
depending  purely  upon  a  question  of  statute  construction, 
can  make  little  difference  in  this  case.  The  rule  as  to  the 
burden  of  proof  is  the  same  upon  principle  and  authority 
at  common  law.  Whenever  the  consideration  of  the  paper 
between  the  original  parties  has  been  illegal,  especially  if 
in  violation  of  a  positive  prohibition  of  statute,  proof  of 
such  illegality  throws  upon  the  holder  the  burden  of 
proving  that  he  got  it  bona  fide,  and  gave  value  for  it. 
Northara  v.  Latouche,  4  Car.  &  P.  140;  Bailey  v.  Bidwell, 
13  Mees.  &  W.  73;  Harvey  v.  Towers,  6  Exch.  656; 
Smith  V.  Braine,  16  Q.  B.  201;  Fitch  v.  Jones,  32  Eng. 
Law  &  Eq.  134  ;  Vallet  v.  Parker,  6  Wend.  615;  Edwards, 
Bills,  686,  687;  Chitty,  Bills,  11th  Am.  ed.  661,  662; 
Story,  Bills,  §  193. 

The  case  of  Bailey  v.  Bidwell  is  directly  in  point ;  and 
Parke,  B.,  gives  a  very  satisfactory  reason  why  the  fact  in 
question  is  not  to  be  presumed  for  the  plaintiff.  '  If, '  he 
says,  '  the  note  were  proved  to  have  been  obtained  by 
fraud,  or  affected  by  illegality,  that  afforded  a  presump- 
tion that  the  person  who  had  been  guilty  of  the  illegality 
would  dispose  of  it,  and  would  place  it  in  the  hands  of 
another  person  to  sue  upon  it.'  The  subsequent  case  of 
Fitch  V.  Jones,  above  cited,  shows  that  in  such  case  the 
original  payee  is  still  presumed  to  be  the  owner,  and  that 
the  plaintiff  sues  for  his  benefit;  and  it  is  to  overcome  this 


316  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

presumption  that  the  jjlaintiff  is  required  to  prove  himself 
a  bona  fide  holder  for  value. 

The  rule  is  the  same  as  to  the  burden  of  proof,  where  it 
is  shown  that  the  paper  was  obtained  by  fraud  or  duress, 
and  when  stolen,  or  put  in  circulation  by  fraud.  See 
authorities  above  cited,  and  Mills  v.  Barber,  1  Mees.  &  W. 
425;  Holme  v.  Karsper,  5  Binn.  469;  Aldrich  lk  Warren, 
16  Me.  465;  N.  Y.  &  Va.  State  Stock  Bank  v.  Gibson,  5 
Duer,  574.  In  fact,  many  of  the  cases,  and  most  of  the 
elementary  works,  place  illegality  in  the  same  category 
with  fraud  or  duress,  as  casting  the  burden  of  proof  upon 
the  holder. 

But,  while  the  result  is  the  same,  it  is  manifest  that  the 
basis  of  the  rule  in  the  case  of  illegality,  though  equally 
solid,  is  quite  different.  In  the  case  of  duress  and  fraud, 
as  well  as  where  the  paper  has  been  stolen,  the  equities  of 
the  defendant  constitute  the  basis  of  the  rule.  But  in  the 
case  of  illegality  of  consideration,  both  parties  are  gener- 
ally equally  in  fault;  and  it  is  not  to  protect  the  equities 
of  the  defendant,  but  on  broad  grounds  of  public  policy,  — 
to  uphold  the  law,  and  to  discourage  its  violation  or 
evasion,  —  that  the  burden  of  proof  is  cast  upon  the  plain- 
tiff. It  is  as  much  the  duty  of  courts  to  discourage  the 
violation  or  evasion  of  law  as  to  protect  the  equities  of 
parties.  And  it  is  upon  this  principle  only  that  the  naked 
defence  of  illegality  is  allowed.  See  opinion  of  Lord 
Mansfield,  in  Holman  v.  Johnson,  1  Cowp.  341.  And, 
upon  this  principle,  courts  should  be  careful  to  avoid 
doing  anything  to  facilitate  the  enforcement  of  such  con- 
tracts, unless  it  appear  affirmatively  that  the  plaintiff  is 
not  in  fault,  and  that  he  has  real  equities  to  be  protected. 

The  evidence  offered  was  improperly  rejected.  The 
judgment  must  be  reversed,  and  a 

^ew  trial  granted. 

All  the  justices  concurred. 


LEAVITT  V.  PUTNAM.  317 

LEAVITT   V.    PUTNAM. 

Court  of  Appeals  of  New  York,  July,  1850.     3  Comst.  494. 

Negotiable  paper  does  not  lose  its  negotiable  character  by  being  dis- 
honored ;  not  even  though  indorsed  to  a  particular  person  without  other 
words. 

The  case  is  stated  in  the  opinion  of  the  court. 

HuELBUT,  J.,  for  the  court. —  On  the  29th  day  of  August, 

1844,  Messrs.  J.  W.  and  R.  Leavitt  made  their  note  for 
$1,570.52,  payable  to  the  order  of  T.  Putnam  &  Co.  (the 
defendants),  eight  months  after  date.  A  few  days  after  the 
maturity  of  the  note,  the  defendants  indorsed  it  as  follows: 
'  Pay  the  within  to  A.  Thacher,  value  received,  May  21, 

1845.  T.  Putnam  &  Co.'  Thacher  indorsed  without  re- 
course, and  delivered  the  note  for  a  valuable  consideration 
to  tlie  American  Exchange  Bank,  in  whose  behalf  this 
action  is  brought. 

On  the  trial,  the  defendants  urged,  among  other  grounds 
of  objection  to  the  plaintiff's  recovery,  that  the  defendants' 
indorsement  was  in  effect  a  new  draft  payable  to  Thacher 
only,  and  not  negotiable,  so  that  no  action  could  be 
maintained  upon  it  in  the  name  of  the  plaintiff.  In  this 
they  were  sustained  by  the  court,  and  the  plaintiff  was 
nonsuited. 

The  other  objections  taken  by  the  defendants  on  their 
motion  for  a  nonsuit  were  not  considered  by  the  court 
below,  and  under  the  circumstances  of  the  case  cannot  be 
noticed  on  this  appeal;  so  that  the  only  thing  for  us  to 
consider  is,  whether  the  indorsement  of  a  note  made  after 
due  differs  from  one  made  before  maturity  in  respect  to 
its  negotiabilit}-.  It  was  conceded  on  the  argument  that 
no  express  authority  could  be  found  sustaining  the  dis- 
tinction upon  which  the  decision  of  the  Superior  Court 
was  based  ;  but  it  was  urged  that  the  defence  could  be  sus- 
tained upon  the  principle  that  a  dishonored  note  loses  its 


318  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

mercantile  character,  and  its  indorsement  becomes  an 
original  contract  which  must  be  made  expressly  negotiable 
in  terms,  or  it  could  not  be  held  to  possess  the  character 
of  negotiability.  There  is  unquestionably  a  difference 
between  the  indorsement  of  a  note  after  due  and  one  while 
it  is  running  to  maturity,  but  this  relates  only  to  a  single 
point  arising  from  the  necessity  of  the  case;  to  wit,  the 
time  of  payment,  which,  in  the  latter  indorsement,  is  fixed 
at  a  future  day  by  the  express  agreement  of  the  parties, 
while  in  the  former  it  is  declared  by  law  to  be  within  a 
reasonable  time,  upon  demand.  But  in  all  other  respects 
the  contract  is  the  same  as  an  indorsement  in  the  usual 
course  of  trade  ;  and  it  is  difficult  to  perceive  how  the  sin- 
gle difference  referred  to  can  at  all  affect  the  negotiability 
of  the  indorsement.  A  bill  or  note  does  not  lose  its 
negotiable  character  by  being  dishonored.  If  originally 
negotiable  it  may  still  pass  from  hand  to  hand  ad  infinitum 
until  paid  by  the  drawer.  Moreover,  tlie  indorser  after 
maturity  writes  in  the  same  form,  and  is  bound  only  upon 
the  same  condition  of  demand  upon  the  drawer  and  notice 
of  non-payment  as  any  other  indorser.  Thus  the  paper 
preserves  its  mercantile  existence  and  retains  the  main 
attributes  of  a  proper  bill  or  note,  and  circulates  as  such 
in  the  commercial  community.  Exceptions  to  a  general 
rule  affecting  so  important  and  numerous  a  class  of  trans- 
actions as  the  one  under  consideration  must  be  productive 
of  great  inconvenience,  and  will  not  be  indulged  except 
for  urgent  reasons;  and  nothing  has  been  made  to  appear 
in  the  argument  or  seems  to  exist  in  the  case,  which  war- 
rants the  court  in  treating  the  ordinary  indorsement  of  a 
dishonored  bill  or  note  as  without  the  laAv  merchant  and 
not  negotiable.  While  it  was  questioned  whether  such  a 
note  was  negotiable,  and  whether  the  indorser  was  charge- 
able except  upon  the  usual  condition  of  demand  and  notice, 
there  Was  perhaps  reason  enough  to  sustain  the  decision 
of  the  court  below.  But  since  both  the  note  and  its 
indorsement,    by  a  long  course   of   decisions,   have   been 


CHESTER   V.  DORR.  319 

treated  as  withiu  the  law  mercliant  iu  respect  to  their 
main  attributes,  the  indorsement  ought  to  be  regarded  as 
negotiable  to  the  same  extent  as  an  indorsement  before 
maturity.  The  latter  follows  the  nature  of  the  original 
bill,  and  is  equally  negotiable.  Edie  v.  The  East  India 
Co.,  2  Burr.  1216;  Mutford  v.  Waleot,  1  Ld.  Raym.  574; 
Allwood  V.  Hazelton,  2  Bailey  (S.  C),  457;  Bishop  v. 
Dexter,  2  Conn.  419;  Berry  v.  Robinson,  9  Johns.  121. 

The  note  in  the  present  case  was  upon  its  face  trans- 
ferable, and  its  character  in  respect  to  negotiability  could 
only  have  been  changed  by  an  indorsement  containing 
express  words  of  restriction.  The  defendants'  indorse- 
ment was  a  full  one,  containing  the  name  of  the  person  in 
whose  favor  it  was  made,  but  omitting  the  words  '  or 
order,'  the  legal  effect  of  which  was,  nevertheless,  to  make 
the  note  payable  to  him  or  his  order,  and  his  indorsement 
therefore  was  effectual  to  transfer  the  note  to  the  plaintiff. 
Chitty,  Bills,  136;  Story,  Prom.  Notes,  §  139. 

I  am  of  opinion  that  the  judgment  of  the  Superior  Court 
should  be  reversed,  and  a  new  trial  awarded. 

Judgment  reversed. 


CHESTER   V.    DORR. 

Court  of  Appeals  of  New  York,  December,  1869.     41  N.  Y.  279. 

That  a  promissory  note,  indorsed  while  current,  without  vahie,  for 
accommodation,  was  taken  after  maturity  from  the  accommodated  party, 
though  for  value,  is  a  defence  iu  favor  of  the  indorser 

Action  by  the  holder  (begun  against  an  indorser,  but  now 
continued)  against  the  executors  of  an  indorser  of  several 
negotiable  promissory  notes.  The  defendant's  testator 
had  indorsed  the  notes  at  the  request  and  for  the  accommo- 
dation, without  value,  of  one  Myers,  who  held  them  at 
maturity.  Holding  the  notes,  unpaid,  for  two  or  three 
years  after  they  became  due,  Myers  now  transferred  them 
for  full  value  to  the  plaintiff's  assignor.     Verdict,  under 


320  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

direction,  for  defendant;  appeal;  report  of  referee  in  favor 
of  plaintiff,  affirmed  on  appeal  by  the  General  Term, 
Superior  Court  of  New  York.     Appeal. 

Woodruff,  J.  —  Mr.  Justice  Story,  in  his  Treatise  on 
Promissory  Notes,  §  178,  thus  states  the  difference  between 
the  legal  effect  of  a  promissory  note  before  and  after 
maturity :  '  If  the  transfer  is  made  before  the  maturity  of 
the  note  to  a  bona  fide  holder  for  a  valuable  consideration, 
he  will  take  it  free  of  all  equities  between  the  antecedent 
parties  of  which  he  had  notice.  If  the  transfer  is  after 
the  maturity  of  the  note,  the  holder  takes  it  as  a  dis- 
honored note,  and  is  affected  by  all  the  equities  between 
the  original  parties,  whether  he  has  any  notice  thereof  or 
not.^  But  ....  it  is  not  to  be  understood  by  this  expres- 
sion that  all  sorts  of  equities  existing  between  the  parties, 
from  other  independent  transactions  between  them,  are 
intended ;  but  only  such  equities  as  attach  to  the  particular 
note,  and  as  between  those  parties,  would  be  available  to 
control,  qualify,  or  extinguish  any  rights  arising  thereon.' 

The  learned  author  gives  this  as  the  final  conclusion 
from  the  niTmerous  cases  cited  by  him,  an  examination  of 
which  shows  that  it  is  only  after  some  difference  of  opinion 
that  it  has  come  to  be  deemed  settled.  Or,  as  ]\Er.  Chitty 
says,  of  the  opinion  of  Buller  and  Ashhurst,  JJ.,  in  Brown 
V.  Davis,  3  T.  R.  80,  expressed  when  Lord  Kenyon  doubted 
its  broad  extent,  '  this  latter  opinion  is  now  the  law.' 
That  opinion  was  to  the  effect  '  that  where  a  note  is  over- 
due, that  alone  is  such  a  suspicious  circumstance  as  makes 
it  incumbent  on  the  party  receiving  it  to  satisfy  himself 
that  it  is  a  good  one,  otherwise  much  mischief  might  arise. ' 
'  If  a  note  indorsed  be  not  due  at  the  time,  it  carries  no 
suspicion  whatever  on  the  face  of  it,  and  the  party  receives 

1  This  form  of  expression  would  hardly  be  used  at  the  present  day. 
'  Notice  '  here  is  used  in  the  sense  of  knowledge.  Taking  after  maturity 
is  now  considered  taking  with  notice,  —  notice  absolute  of  equities  if  any 
exist.     Bills  and  Notes  (Students'  Series),  207. 


CHESTER  V.  DORR.  321 

it  on  its  own  intrinsic  credit.  But  if  it  is  overdue,  though 
I  do  not  say  that  by  law  it  is  not  negotiable,  yet  certainly 
it  is  out  of  the  common  course  of  dealing,  and  does  give 
rise  to  suspicion.  .  .  .  Generally  when  a  note  is  due,  the 
party  receiving  it  takes  it  on  the  credit  of  the  person  who 
gives  it  to  him.' 

The  foundation  of  the  rule  which  distinguished  commer- 
cial paper  from  ordinary  commercial-law  choses  in  action 
is  in  harmony  with  the  law  thus  stated.  The  holder  of 
the  former  is  protected  against  any  inquiry  into  its  pre- 
vious history,  and  is  warranted  in  giving  it  full  faith, 
according  to  its  tenor,  because  commercial  convenience 
and  the  importance  of  the  free  and  unembarrassed  use  of 
commercial  credits  require  it;  and  on  this  the  mercantile 
customs,  which  ripened  into  the  law  merchant,  were 
founded.  These  reasons,  however,  could  have  no  applica- 
tion to  paper  which  had  been  dishonored.  The  credit  it 
was  adapted  to  invite  is  spent,  and  the  very  fact  of  dis- 
honor is  inconsistent  with  the  purposes  which  the  rule  was 
intended  to  subserve. 

The  rule  is  simple  and  convenient  of  application,  is  in 
no  sense  inconsistent  with  the  usefulness  of  negotiable 
paper  for  the  purposes  for  which  it  is  intended,  and,  as  it 
seems  to  me,  is  a  just  security  against  mischief  and  fraud. 
In  the  terms  in  which  it  is  above  stated  it  includes  the 
defence  of  want  of  consideration,  whenever  that  ren- 
ders the  note  invalid  in  the  hands  of  him  who  holds  it 
when  it  becomes  due.  Such  want  of  consideration  is  an 
inherent  defect  in  the  contract  itself;  or,  in  the  language 
of  the  rule,  attaches  to  the  note  itself,  in  the  hands  of  one 
for  whose  accommodation  a  note  is  made,  and  does  not, 
like  a  set-off  or  other  collateral  matter  apart  from  the  note, 
arise  out  of  an  independent  transaction. 

But  the  same  learned  writer  above  referred  to  states 
that  the  mere  fact  that  an  accommodation  note  has  been 
indorsed  after  it  became  due,  does  not  of  itself,  without 
some  other  equity  in  the  maker,  defeat  a  recovery  by  the 

21 


322  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

indorsee.  Story,  §  194.  And  Mr.  Chitty  states  that  it 
has  been  so  decided.  The  cases  of  Charles  v.  Marsdeu,  1 
Taunt.  224,  Sturtevant  v.  Ford,  4  Man.  &  G.  101,  4  Scott, 
608,  and  Caruthers  v.  West,  11  Q.  B.  143,  are  in  support 
of  the  proposition.  These  are  the  cases  upon  the  authority 
of  which  the  present  case  was  decided  below. 

I  am  constrained  to  say  that  I  am  not  satisfied  that  such 
an  exception  to  the  rule  is  either  just  or  called  for  by  any 
principle,  nor  am  I  at  all  convinced  by  the  reasons  assigned 
for  the  exception. 

That  the  maker  or  indorser  of  a  note  for  the  accommo- 
dation of  another  should  be  held  to  the  terms  of  his  own 
indorsement,  according  to  their  just  interpretation,  I  fully 
agree.  That  one  who  receives  such  paper  before  maturity 
should  not  be  affected  by  the  mere  fact  that  it  was  made  or 
indorsed  without  consideration  I  equally  agree.  That 
when  a  party  lends  his  note  or  indorsement  to  another 
without  restriction  as  to  its  use  he  authorizes  the  negotia- 
tion thereof,  in  any  manner  which  may  serve  the  conve- 
nience or  credit  of  the  borrower,   may  be  conceded. 

From  this  latter  concession  it  is  argued  that  such  a  lend- 
ing of  one's  name  is  furnishing  a  continuing  guaranty  of 
the  payment  of  the  note,  irrespective  of  its  terms  as  to 
time  of  payment,  and  is  therefore  binding  whenever  it  is 
transferred  and  however  long  after  it  has  become  payable 
and  been  dishonored.  That  the  absence  of  express  restric- 
tion warrants  the  inference  that  the  making  or  indorsement 
was  to  enable  the  borrower  to  use  it  whenever  thereafter  it 
suited  his  pleasure,  and  so  '  enforcing  its  payment  is  in 
accordance  with  the  object  for  which  the  note  was,  as 
matter  of  accommodation,  made  or  indorsed;  '  and  in  the 
discussion  in  England  it  has  been  suggested  that,  suppos- 
ing an  accommodation  acceptance  to  remain  in  the  hands 
of  the  party  accommodated,  it  may  be  treated  as  giving 
authority  by  implication  to  use  it  thereafter  as  his  conve- 
nience or  needs  may  require. 

In  respect  to  the  last  suggestion  two  observations   are 


CHESTER  V.  DORR.  323 

pertinent;  first,  it  begs  the  question,  for  assuming  the 
rule  to  be  that  he  who  receives  a  note  or  bill  after  dishonor 
acquires  no  better  title  to  recover  thereon  than  he  has 
from  whom  it  was  received,  then  there  is  no  reason  why 
the  accommodation  maker  or  indorser  should  not  treat 
the  note  in  the  hands  of  the  borrower,  after  maturity,  as 
functus  officio,  and  mere  waste  paper.  And  second,  how 
is  the  maker  or  indorser  in  such  case  to  withdraw  his  note 
or  indorsement  ?  Is  he  to  be  driven  into  a  court  of  equity, 
and  to  praying  out  an  injunction,  to  prevent  a  subsequent 
transfer?  I  think  not.  Take  the  present  case;  the  note 
itself  was  the  property  of  the  holder  at  its  maturity 
(Myers),  and  was  a  valid  note  in  his  favor  against  the 
maker.  The  indorsement  of  the  defendant  (the  appellant's 
testator)  was  material  as  a  transfer  of  title,  although,  being 
made  for  Myers'  accommodation,  it  could  not  be  enforced 
against  such  defendant  as  indorser.  I  cannot  agree  that 
it  was  incumbent  on  the  defendant  to  go  into  a  Court  of 
Chancery  to  compel  Myers  to  suffer  a  writing  of  the  words 
*  without  recourse  '  or  an  equivalent  expression  as  a  quali- 
fication of  such  indorsement. 

As  to  the  other  reason,  it  is  even  less  satisfactory, 
because  it  proceeds,  I  think,  upon  an  entire  misconstruc- 
tion of  the  act  of  making  or  indorsing  a  note  for  the 
accommodation  of  another.  Its  purpose  and  object  is  to 
obtain  credit  for  such  other,  or  to  enable  him  to  do  so. 
The  very  terms  of  the  note  declare  the  credit  it  is  intended 
to  procure,  that  is  to  say,  until  the  maturity  of  the  note. 
Within  that  range  the  making  or  indorsement  being 
unrestricted  as  to  its  use,  the  borrower  may  use  it  as  his 
exigencies  require,  and  a  transferee  may  receive  it  in 
reliance  upon  the  undertaking  which  is  imported  by  its 
terms. 

But  the  very  term  of  payment  contained  in  the  note 
imports  that  the  accommodation  party  undertakes  that  the 
note  shall  be. paid  at  its  maturity,  and  that  he  who  then 
holds  the  note  shall  have  recourse  to  him,  if  it  be  not  then 


324  CASES  ON  BILLS,  NOTES,  AND  CHEQLTIS. 

paid.  "Where  the  accommodation  (as  in  the  present  case) 
is  by  indorsement,  that  is  the  precise  contract,  viz.,  that 
the  note  shall  be  paid  at  maturity,  and  not  that  it  shall  be 
paid  at  any  future  time.  If  the  note  be  not  paid  at 
maturity,  the  contract  is  broken,  and  if  he  who  then  holds 
it  can  recover  thereon,  then  his  right  of  recovery  may  be 
transferred  to  another;  and  the  recovery  of  the  latter  will 
be,  not  because  the  accommodation  indorser  undertook  that 
the  note  should  be  paid  to  him,  or  should  be  paid  at  some 
date  after  it  was  due,  but  because  a  valid  cause  of  action, 
existing  in  favor  of  the  holder  at  maturity,  has  been  trans- 
ferred to  him. 

It  is  not  according  to  the  intent  or  meaning  of  an  indorse- 
ment for  another's  accommodation  to  say  that  the  indorser 
intends  to  give  the  use  of  his  credit  for  any  other  period 
than  that  limited  in  the  note,  or  that  such  an  indorsement 
imparts  authority  to  use  it  when  that  period  has  elapsed. 

One  may  be  willing  by  indorsement  to  guaranty  the 
solvency  of  another  for  sixty  days,  or  for  six  months,  and 
yet  he  would  whollj^  refuse  to  do  so  for  a  period  of  two 
years.  And  accordingly,  when  such  accommodation  is 
given,  it  is  a  most  material  circumstance  that  the  time 
during  which  the  borrower  is  at  liberty  to  obtain  credit  on 
the  note  is  fixed  by  the  limitation  of  the  time  of  payment 
therein. 

I  deem  the  just  view  of  the  subject  to  be  that,  when  a 
note  has  become  due  and  is  dishonored,  the  rights  and 
responsibilities  of  the  parties  thereto  are  fixed.  The  note 
then  loses  the  chief  attribute  of  commercial  paper.  It  is 
no  longer  adapted  to  the  uses  and  purposes  for  which  such 
paper  is  made,  and  in  respect  of  which  it  is  important  that 
it  should  circulate  freely.  And  thereafter  he  who  takes 
it  takes  it  with  knowledge  of  its  dishonor,  with  obvious 
reason  to  believe  that  there  exists  some  reason  why  it 
was  not  paid  to  the  holder;  and  takes  it  with  just  such 
right  to  enforce  it  as  such  holder  himself  has,  and  no 
other. 


CHESTER  V.  DORR.  325 

In  thus  stating  my  views  I  am  not  insensible  of  the 
apparent  authority  for  the  decision  made  below ;  but  I  am 
also  aware  that  the  judges  in  England  have  not  been  at  all 
agreed  on  the  subject,  and  have  expressed  doubt  of  the  cor- 
rectness of  the  decision  in  Charles  v.  Marsden,  upon  which 
the  other  two  cases  above  referred  to  were  decided.  The 
cases,  largely  collected  in  the  notes  to  Chitt}'  in  the 
recent  edition,  warrant,  I  think,  the  dissatisfaction  I  have 
expressed. 

No  case  in  this  State  has  called  for  a  decision  of  the 
question;  and  yet  in  Brown  v.  Mott,  7  Johns.  361,  and  in 
Grant  v.  Ellicott,  7  Wend.  227,  the  case  of  Charles  v. 
Marsden  is  referred  to  without  disapprobation,  and  the 
proposition  derived  therefrom  is  stated;  but  in  neither 
was  the  point  now  raised  before  the  court,  for  in  neither 
did  it  appear  that  the  plaintiff  took  the  note  after  it 
became  due.  And  that  in  other  States  in  this  country 
such  an  exception  to  the  general  rule  first  above  stated  is 
repudiated,  see  Brown  v.  Hastings,  36  Penn.  St.  285; 
Britton  v.  Bishop,  11  Vt.  70;  Odiorne  v.  Howard,  10  N. 
H.  343;  Cummings  v.  Little,  45  Maine,  183;  Vinton  v. 
King,  4  Allen,  563;  Kellogg  v.  Barton,  12  Allen,  527. 
And  the  general  proposition  that  he  who  takes  a  note  when 
overdue  takes  it  subject  to  all  defences  inherent  in  the 
note,  or  arising  out  of  any  agreement  with  the  holder, 
expressed  or  implied,  and  relating  thereto,  or,  in  another 
form,  that  such  an  indorsee  obtains  no  greater  or  other 
rights  than  his  indorser  had  in  it  at  the  time  of  the  in- 
dorsement, has  been  stated  as  law  in  cases  almost  without 
luimber. 

It  will  perhaps  suffice  to  refer  to  two  from  the  Supreme 
Court  of  the  United  States.  Andrews  v.  Pond,  13  Pet. 
79,  says  of  the  indorsee  of  a  dishonored  bill :  '  If  he  chooses 
to  receive  it,  he  takes  it  with  all  the  infirmities  belonging 
to  it,  and  is  in  no  better  condition  than  the  person  from 
whom  he  received  it.'  Fowler  v.  Brantley,  114  Pet.  321 
[says] :   '  A  note  overdue  or  bill  dishonored  is  a  circum- 


326  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

stance  of  suspicion  to  put  those  dealing  for  it  afterward  on 
their  guard,  and  in  whose  hands  it  is  open  to  the  same 
defences  as  it  was  in  the  hands  of  the  holder  when  it  fell 
due.  After  maturity  such  paper  cannot  be  negotiable  in 
the  due  course  of  trade,  although  still  assignable.'  See 
also  Foley  v.  Smith,  6  Wall.  492. 

In  my  opinion  the  just  rule,  and  the  rule  resting  on  the 
soundest  principle,  requires  us  to  reverse.  The  supposed 
exception  to  the  general  rule  rests  on  neither  reason  nor, 
as  I  think,  on  authority,  certainly  not  in  this  country. 

Five  other  judges  for  reversal;  two  judges  dissented. 

Judgment  reversed. 


HASCALL   V.    WHITMORE. 

Supreme  Court  of  Maine,  April,  1841.     19  Maine,  102. 

One  who  purchases  commercial  paper  for  value,  with  notice  of  defect 
in  its  inception,  from  a  bona  fide  holder  without  notice,  stands  upon  the 
riglits  of  the  latter,  and  may  recover  the  amount  of  the  paper. 

The  case  is  stated  in  the  opinion  of  the  court. 

Shepley,  J,,  for  the  court. — The  plaintiffs  are  joint 
owners  of  a  negotiable  promissory  note  purchased  before 
it  became  payable.  One  of  them  is  a  holder  for  value 
without  notice  ;  the  other  with  notice,  but  deriving  his 
title  through  others  who  were  bona  fide  holders  without 
notice.  As  between  the  original  parties  the  note  may  be 
regarded  as  made  without  consideration.  Andrews,  who 
was  the  first  and  an  innocent  indorsee  for  value,  did  not 
indorse  it  when  he  disposed  of  it,  and  he  was  properly 
admitted  as  a  witness.  Whitaker  v.  Brown,  8  Wend.  490. 
He  could  have  collected  it,  for  the  want  of  consideration 
could  not  be  set  up  against  him.  A  knowledge  of  the  facts 
acquired  afterward  would  not  aifect  his  rights.  He  had 
not  only  a  legal  right  to  hold  and  collect  it,  but  to  nego- 


HASCALL   V.  WHITMORE.  327 

tiate  it.  And  the  maker  could  not  impair  that  right  by 
giving  notice  that  it  was  made  without  consideration.  Nor 
Avould  he  be  injured  by  a  transfer  to  one  having  a  full 
knowledge  of  the  facts ;  for  his  position  would  not  be  more 
unfavorable  than  before. 

Bayley  states  that  the  want  of  consideration  cannot  be 
insisted  upon  '  if  the  plaintiff,  or  any  intermediate  party 
between  him  and  the  defendant,  took  the  bill  or  note  bona 
fide  and  upon  a  valuable  consideration.'  Bayley,  550, 
ed.  by  Phillips  &  Sewall. 

The  case  of  Thomas  v.  Newton,  2  Car.  &  P.  606,  was 
assumpsit  on  a  bill  drawn  by  Wilson  on  the  defendant  and 
accepted,  and  by  him  indorsed  to  Dandridge  and  by  him  to 
the  plaintiff.  The  defence  was  a  want  of  consideration. 
Lord  Tenterden  says :  '  If  the  defendant  shows  that  there 
was  originally  no  consideration  for  the  bill,  that  throws  it 
on  the  plaintiff  to  show  that  he  gave  value  for  it,  or  that 
value  was  given  for  it  by  Dandridge;^  for  if  either  the 
plaintiff  or  Dandridge  gave  value  for  it,  the  plaintiff  may 
recover;  otherwise  the  defendant  is  entitled  to  recover,' 

In  Solomons  v.  The  Bank  of  England,  13  East,  134,  135, 
note  b,  it  appeared  that  the  bank-note  had  been  obtained 
fraudulently  from  Batson  &  Co.,  who  informed  the  bank 
of  it.  The  plaintiff  as  holder  claimed  payment  of  the 
bank,  and  it  was  refused.  He  had  received  the  bill  of 
Hendricks  &  Co. ;  and  it  did  not  appear  that  he  paid  value 
for  it  before  notice.  Lord  Kenyon  says,  *  Upon  this  evi- 
dence I  think  Solomons  must  be  considered  to  be  in  the 
same  situation  as  Hendricks  &  Co.'  But  as  it  did  not 
appear  that  they  were  holders  for  value  without  notice,  the 
plaintiff  did  not  recover. 

In  Smith  v.  Hiscock,  14  Maine,  449,  where  a  negotiable 
promissory  note  had  been  indorsed  bona  fide  and  for  value 
before  it  was  payable,  the  Chief  Justice  says  :  '  The  want 
of  consideration  is  not  an  available  defence  against  a  sub- 

1  This  doctrine  has  been  exploded.  See  Bills  and  Notes  (Students' 
Series),  224;  Patou  t:  Coit,  ante,  p.  311. 


328  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

sequent  holder,  to  whom  it  may  have  been  passed  after  it 
was  due.  The  promise  is  good  to  the  first  indorsee  free 
from  that  objection ;  and  the  power  of  transferring  it  to 
others  with  the  same  immunity'  is  incident  to  the  legal 
right  which  he  had  acquired  in  the  instrument.  By  the 
first  negotiation  the  want  of  consideration  between  the 
original  parties  ceases  as  a  valid  ground  of  defence. ' 

If  the  relations  between  the  maker  and  the  holder  only 
were  to  be  considered,  the  want  of  consideration  would  be 
a  good  defence  against  one  who  did  not  purchase  for  value, 
or  who  did  so  after  it  was  once  due.  And  yet  it  has  been 
decided  that  one  so  situated  may  avoid  that  defence  by 
showing  that  it  could  not  have  been  interposed  against  a 
prior  holder.  The  same  principle  appears  to  be  equally 
applicable  to  a  holder  who  has  purchased  with  notice.  If 
the  relations  between  himself  and  the  maker  only  were  to 
be  considered,  he  could  not  recover;  but  purchasing  of  one 
who  had  no  notice,  he  must  be  considered  to  be  in  the  same 
situation  and  as  entitled  to  the  same  protection. 

Defendant  defaulted  and  judgment  for  amount  due  on 
the  note. 

NEWCOMB  V.    RAYNOR. 

Supreme  Court  of  New  York,  May,  1839.     21  AVend.  108. 

If  the  holder  of  a  promissory  note  release  the  first  indorser,  this  dis- 
charges the  subsequent  indorsers. 

Assumpsit  against  the  maker  and  second  and  third 
indorsers  of  a  promissory  note.  Plea  by  the  indorsers 
that  the  holder  had  given  a  release  under  seal  to  Goings, 
the  first  indorser.     Demurrer  to  the  plea. 

Nelson,  C.  J.,  for  the  court.  — I  am  of  opinion  the  plea 
constitutes  a  good  bar  to  the  action.  As  betv^een  the  first 
and  subsequent  indorsers,  the  former  must  be  regarded  in 
the  light  of  principal;  he  stands  behind  them  upon  the 
paper,  and  is  bound  to  take  it  up,   in  case  of  default  of 


McLEMORE   v.  POWELL.  329 

the  maker.  A  discharge  of  him,  therefore,  by  the  holder 
(regarding  the  relative  position  of  the  parties),  on  general 
principles,  operates  to  release  them. 

It  is  said  their  rights  are  not  prejudiced,  as  they  may 
still  resort  to  an  action  against  him  if  subjected  to  the 
payment  of  the  note,  as  the  release  leaves  the  implied  con- 
tract existing  between  the  first  and  subsequent  indorsers 
unimpaired.  Conceding  this  to  be  so,  to  permit  a  recovery 
against  the  defendants  would  but  lead  to  an  unnecessary 
circuity  of  action.  The  plea  shows  a  discharge  for  a  pre- 
sumed good  consideration  (as  it  is  under  seal)  of  the  first 
indorser,  and  it  cannot  be  doubted,  as  the  case  stands,  that 
if  the  defendants  should  be  obliged  to  call  upon  him,  the 
plaintiff  would  be  bound  to  take  his  place.  The  case, 
therefore,  comes  within  the  familiar  rule  that  a  release  of 
the  principal  operates  to  discharge  the  surety. 

It  is  further  said  that  Goings  may  not  have  been  legally 
charged  as  an  indorser.  If  this  were  so,  the  plaintiff 
should  have  replied  the  fact,  as  we  will  not  presume  it  in 
the  face  of  the  acts  of  both  him  and  the  plaintiff  to  the 
contrary.  The  release  would  not  have  been  necessary  on 
such  a  supposition. 

Judgment  for  defendants  on  demurrer;  leave  to  amend 
on  usual  terms. 

McLEMORE   v.    POWELL. 

Supreme  Court  of  the  United  States,  January,  1827.     12  Wheat. 

554. 

Mere  agreement  by  the  holder  with  the  drawer  of  a  bill  of  exchange 
for  delay,  made  without  consideration,  and  not  communicated  to  the  indor- 
ser, does  not  discharge  the  indorser. 

The  case  is  stated  in  the  opinion  of  the  court. 

Story,  J.,  for  the  court.  — This  is  a  writ  of  error  to  the 
Circuit  Court  of  the  United  States  for  the  District  of  West 
Tennessee. 


330  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

The  original  action  was  assumpsit,  brought  by  Powell, 
Fosters,  &  Co.,  as  holders  of  a  bill  of  exchange,  drawn  by 
one  Thomas  Fletcher,  in  May,  1819,  at  Nashville,  upon 
Messrs.  McNeil,  Fisk,  &  Rutherford,  at  New  Orleans, 
payable  to  Thomas  Read,  or  order,  for  $2,000  in  sixty 
days  after  date,  and  by  him  indorsed  to  the  defendant, 
John  C.  McLemore,  and  by  him  to  the  plaintiffs.  The 
bill,  upon  presentment  for  acceptance,  was  dishonored, 
and  due  notice  of  the  dishonor  was  given  to  the  defendant. 

At  the  trial,  upon  the  general  issue,  Thomas  Fletcher, 
the  drawer,  was,  under  a  release  from  the  defendant, 
McLemore,  examined  as  a  witness,  and,  among  other 
things,  testified  that,  in  the  month  of  October  following 
the  dishonor  of  the  bill,  '  one  of  the  plaintiffs  applied  to 
him  at  Nashville  for  the  money  on  the  bill,  and  threatened 
to  sue  immediately  if  an  arrangement  was  not  made  to  pay 
the  bill.  The  witness  then  proposed  to  the  plaintiff,  if  he 
would  indulge  him  four  or  five  weeks,  he  would  himself, 
to  a  certainty,  pay  the  bill.  To  this  the  plaintiff  agreed, 
and  told  the  witness  he  was  going  to  Louisville,  Kentucky, 
and  would  return  by  Nashville,  about  the  expiration  of 
that  time,  and  would  receive  said  payment.  Since  said 
time  the  witness  has  never  seen  said  plaintiff. '  The  wit- 
ness further  testified  that  the  defendant  was  an  accommo- 
dation indorser  for  him  on  the  bill ;  that  the  plaintiff  told 
him  that  the  bill  would  be  left  with  a  Mr.  Washington,  at 
Nashville;  that  he  expected  he  would  himself  be  at  that 
place  at  the  time  agreed  on,  but  that,  if  he  did  not  come, 
he  would  give  the  instructions  to  Mr.  Washington,  by 
letter,  what  to  do  if  the  witness  did  not  pay  at  the  expira- 
tion of  the  time  agreed  on.  It  did  not  appear  that  any 
consideration  was  paid  or  stipulated  for  this  delay;  and 
no  suit  was  commenced  until  after  this  period  had  elapsed. 
The  district  judge  instructed  the  jury  that,  if  they  believed 
the  conversation  above  stated  amounted  to  no  more  than 
an  agreement  that  a  suit  should  not  be  brought  for  four 
or  five  weeks,  and  that  no  premium  or  consideration  was 


McLEMORE  v.  POWELL.  331 

given  or  j^aid,  or  to  be  paid  by  Fletcher,  the  indorsers 
were  not  discharged;  that  an  agreement  for  giving  day 
must  be  an  obligatory  contract  for  a  consideration  which 
ties  up  the  hands  of  the  creditor  and  disables  him  from 
suing,  thereby  affecting  the  interests  and  rights  of  the 
indorser;  that  the  indorser  has  a  right  to  require  and  de- 
mand of  the  creditor  to  bring  a  suit  against  the  drawer, 
and  if  he  has  disabled  himself  from  bringing  a  sviit  by  a 
contract  for  a  consideration,  he  has  thereby  released  the 
indorser;  and  that  if  the  jury  were  satisfied  from  the 
testimonj^  that  time  was  given  for  a  valuable  considera- 
tion paid  or  to  be  paid,  or  that  a  new  security  was  taken 
by  the  holder,  the  indorser  was  discharged  and  absolved 
from  all.  the  obligations  of  the  indorsement. 

Under  this  instruction,  the  jury  found  a  verdict  for  the 
plaintiffs,  upon  which  there  was  judgment  given  in  their 
favor.  A  bill  of  exceptions  was  taken  to  the  charge  of  the 
court;  and  the  present  writ  of  error  is  brought  for  the 
purpose  of  ascertaining  its  legal  correctness. 

It  is  unnecessary  to  give  any  opinion  upon  that  part  of 
the  charge  which  respects  the  right  of  an  indorser  to 
require  the  holder  to  commence  a  suit  against  the  drawer. 
In  general,  the  indorser,  by  paying  the  bill,  has  a  complete 
power  to  reinstate  himself  in  the  possession  and  ownership 
of  the  bill,  and  thus  to  entitle  himself  to  a  personal  remedy 
on  the  instrument  against  all  antecedent  parties.  The 
same  reason,  therefore,  does  not  exist,  as  may  in  com- 
mon cases  of  suretyship,  to  compel  the  creditor  to  active 
diligence  by  suit  against  the  principal.  Without  ex- 
pressing any  opinion  on  this  point,  it  is  sufficient  to  say 
that  the  error,  if  any,  was  favorable  to  the  defendant, 
and,  therefore,  it  can  form  no  subject  of  complaint  on  his 
part. 

The  case  then  resolves  itself  into  this  question,  — 
whether  a  mere  agreement  with  the  drawers  for  delay, 
without  any  consideration  for  it,  and  without  any  com- 
munication with  or  assent  of  the  indorser,  is  a  discharge 


332  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

of  the  latter,  after  lie  lias  been  fixed  in  his  responsibility 
by  the  refusal  of  the  drawee,  and  due  notice  to  himself. 
And  we  are  all  of  opinion  that  it  is  not.  We  admit  the 
doctrine  that,  although  the  indorser  has  received  due 
notice  of  the  dishonor  of  the  bill,  yet  if  the  holder  after- 
wards enters  into  any  new  agreement  with  the  drawer  for 
delay,  in  any  manner  changing  the  nature  of  the  original 
contract,  or  affecting  the  rights  of  the  indorser,  or  to  the 
prejudice  of  the  latter,  it  will  discharge  him.  But,  in 
order  to  produce  such  a  result,  the  agreement  must  be  one 
binding  in  law  upon  the  parties,  and  have  a  sufficient  con- 
sideration to  support  it.  An  agreement  without  considera- 
tion is  utterly  void,  and  does  not  suspend  for  a  moment 
the  rights  of  any  of  the  parties.  In  the  present  case,  the 
jury  have  found  that  there  was  no  consideration  for  the 
promise  to  delay  a  suit,  and,  consequently,  the  plaintiffs 
were  at  liberty  immediately  to  have  enforced  their  reme- 
dies against  all  the  parties.  It  was  correctly  said  by  Lord 
Eldon,  in  English  v.  Darley,  2  Bos.  &  Pul.  61,  that  '  as  long 
as  the  holder  is  passive,  all  his  remedies  remain;  '  and, 
we  add,  that  he  is  not  bound  to  active  diligence.  But,  if 
the  holder  enters  into  a  valid  contract  for  delay,  he  thereby 
suspends  his  own  remedy  on  the  bill  for  the  stipulated 
period ;  and,  if  the  indorser  were  to  pay  the  bill,  he  could 
only  be  subrogated  to  the  rights  of  the  holder,  and  the 
drawer  could  or  might  have  the  same  equities  against  him 
as  against  the  holder  himself.  If,  therefore,  such  a  con- 
tract be  entered  into  without  his  assent,  it  is  to  his 
prejudice,  and  discharges  him. 

The  cases  proceed  upon  the  distinction  here  pointed 
out,  and  conclusively  settle  the  present  action.  In 
Walwyn  v.  St.  Quentin,  1  Bos.  &  Pul.  652,  where  the 
action  was  by  indorsees  against  the  drawer  of  a  bill,  it 
appeared  that,  after  the  bill  had  become  due,  and  been 
protested  for  non-payment,  though  no  notice  had  been 
given  to  the  drawer,  he  having  no  effects  in  the  hands  of 
the  acceptor,  the  plaintiffs  received  part  of  the  money  on 


McLEMORE  v.  POWELL.  333 

account  from  the  indorser;  and  to  an  application  from  the 
acceptor,  stating  that  it  was  probable  he  should  be  able  to 
pay  at  a  future  period,  they  returned  for  answer  that  they 
would  not  press  him.  The  court  held  it  no  discharge ;  and 
Lord  Chief  Justice  Eyre,  in  delivering  the  opinion  of  the 
court,  said  that  if  this  forbearance  to  sue  the  acceptor  had 
taken  place  before  noticing  and  protesting  for  non-pay- 
ment, so  that  the  bill  had  not  been  demanded  when  due,  it 
was  clear  the  drawer  would  have  been  discharged,  for  it 
would  be  giving  a  new  credit  to  the  acceptor.  But  that, 
after  protest  for  non-payment,  and  notice  to  the  drawer, 
or  an  equivalent  to  notice,  a  right  to  sue  the  drawer  had 
attached,  and  the  holder  was  not  bound  to  sue  the  acceptor. 
He  might  forbear  to  sue  him.  The  same  doctrine  was 
held  in  Arundel  Bank  v.  Goble,  reported  in  a  note  to 
.Chitty  on  Bills.  Chitty,  379,  note  c,  ed.  1821.  There  the 
acceptor  applied  for  time,  and  the  holders  assented  to  it, 
but  said  they  should  expect  interest.  It  was  contended 
that  this  was  a  discharge  of  the  drawer ;  but  the  court  held 
otherwise,  because  the  agreement  of  the  plaintiffs  to  wait 
was  without  consideration,  and  the  acceptor  might,  not- 
withstanding the  agreement,  have  been  sued  the  next 
instant;  and  that  the  understanding  that  interest  should 
be  paid  by  the  acceptor  made  no  difference.  So,  in  Bad- 
nail  V.  Samuel,  3  Price's  Exch.  521,  in  a  suit  by  the 
holder  against  a  prior  indorser  of  a  bill  of  exchange,  it 
was  held  that  a  treaty  for  delay  between  the  holder  and 
acceptor,  upon  terms  which  were  not  finally  accepted,  did 
not  discharge  the  defendant,  although  an  actual  delaj'"  had 
taken  place  during  the  negotiation,  because  there  was  no 
binding  contract  which  precluded  the  plaintiffs  from  suing 
the  acceptor  at  any  time. 

Upon  authority,  therefore,  we  are  of  opinion,  that  this 
writ  of  error  cannot  be  sustained,  and  that  the  judgment 
below  was  right.  Upon  principle,  we  should  entertain  the 
same  opinion,  as  we  think  the  whole  reasoning  upon  which 
the  delay  of  the  holder  to  enforce  his  rights  against  the 


334  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

drawer  is  held  to  discharge  the  indorser   after  notice,  is 
founded  upon  the  notion  that   the  stipulation  for  delay 
susj)ends  the  present  rights  and  remedies  of  the  holder. 
The  judgment  of  the  court  below  is,  therefore. 

Affirmed  ivith  costs. 


SOHIER  V.    LORING. 
Supreme  Court  of  Massachusetts,  November,  1850.     6  Cush.  537. 

A  composition  deed,  whereby  the  holder  of  a  bill  of  exchange  gives 
time  to  the  acceptor,  and  agrees  to  discharge  him  on  receiving  a  portion 
of  the  debt,  reserving  the  holder's  remedies  against  other  parties  to  the 
bill,  does  not  discharge  the  drawer  and  indorsers. 

This  was  an  appeal  from  a  decision  of  Ellis  Gray  Loring, 
Esquire,  a  master  in  chancery,  overruling  the  motion  of 
the  appellant,  as  assignee  of  Edward  H.  Green  &  Com- 
pany, insolvent  debtors,  to  expunge  or  reduce  the  amount 
of  certain  claims,  proved  before  the  master  against  the 
estate  of  Green  &  Company. 

The  case  was  submitted  to  the  court  upon  the  following 
agreed  statement  of  facts :  On  the  23d  of  February,  1846, 
a  warrant  was  issued  by  the  said  master,  against  the  estate 
of  Edward  H.  Green  and  John  E.  Short,  both  of  Boston, 
merchants  and  partners,  doing  business  under  the  firm  of 
Edward  H.  Green  &  Company.  The  first  publication  of 
the  notice  required  by  the  warrant  was  made  on  the  24th 
of  February,  1846,  and,  on  the  11th  of  March  following, 
the  appellant  was  chosen  assignee,  and  duly  received  an 
assignment  of  all  the  insolvent's  estate. 

Previous  to  their  insolvency,  Green  &  Company,  as 
copartners,  were  employed  by  Oliver  P.  Mills,  of  ^STew 
York,  to  make  and  negotiate  certain  bills  of  exchange, 
drawn  on  the  firm  of  Major  &  Wallace,  of  London;  and 
from  time  to  time,  as  opportunity  offered.  Green  & 
Company  had  drawn  on  account  of  Mills  various  bills  of 


SOHIER  V.  LORING.  335 

exchange,  against  consignments  of  goods  in  the  hands  of 
Major  &  Wallace  belonging  to  Mills,  which  bills  were 
sold  in  the  usual  course  of  business  to  the  appellees. 
Green  &  Company,  for  a  commission  paid  to  them  by- 
Mills,  had  become  responsible  as  the  drawers  or  indorsers 
of  these  bills,  which  were  duly  accepted  by  Major  & 
Wallace,  but  were  not  paid  at  maturity.  Notice  of  their 
dishonor  was  duly  sent  to  the  drawers,  and  the  bills  were 
taken  up  by  the  appellees,  and  proved  by  them  against  the 
estate  of  Green  &  Company. 

The  appellees,  whose  claims  were  thus  proved,  Hawes, 
Gray,  &  Company,  proved  on  the  10th  of  March,  1846; 
Benjamin  Loring  and  Levi  H.  Marsh,  executors  of  Elijah 
Loring,  proved  on  the  20th  of  March;  Thomas  Tarbell 
&  Company  proved  on  the  29th  of  April,  1846 ;  and  Samuel 
May  &  Company  proved  on  the  18th  of  January,  1847;  the 
whole  amounting  to  about  $26,000. 

The  bills  proved  by  Hawes,  Gray,  &  Company  were 
drawn  by  Mills  payable  to  his  own  order,  and  indorsed  by 
him  to  the  order  of  Green  &  Company,  and  by  them 
indorsed.  The  bills  proved  by  the  other  appellees  were 
drawn  by  Green  &  Company  on  account  of  Mills.  All 
the  bills  were  directed  to  Major  &  Wallace,  and  were  by 
them  accepted.  The  several  appellees  sent  their  bills  to 
England  in  payment  of  debts  or  to  make  purchases  there 
during  the  months  of  November  and  December,  1845;  and 
the  bills  were  at  maturity  returned  to  them  dishonored,  by 
due  course  of  mail. 

At  a  meeting  of  the  parties  holding  bills  drawn  by  or  by 
the  order  of  Oliver  P.  Mills  held  in  London,  on  the  5th  of 
June,  1846,  a  proposition  for  compromising  their  claims 
against  ]Major  &  Wallace  on  these  bills  was  agreed  to; 
and,  on  the  23d  of  December  following,  an  indenture  for 
that  purpose  was  drawn  up  and  executed  in  London,  by 
Major  &  Wallace,  by  these  bill-holders,  including  the 
appellees,  by  their  respective  agents,  and  by  certain 
trustees   appointed  under    the   composition    deed.      This 


336  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

composition  deed  recited  that  Major  &  Wallace,  being 
unable  to  pay  in  full  all  their  debts,  had  proposed  to  pay 
their  creditors,  including  the  parties  holding  bills  drawn 
by  or  by  the  order  of  Oliver  P.  Mills  and  accepted  by 
Major  &  Wallace,  a  composition  of  five  shillings  in  the 
pound,  on  the  amount  of  their  debts,  by  three  equal  instal- 
ments, payable  at  three,  six,  and  nine  months  from  the 
date  of  the  deed,  and  to  be  secured  by  promissory  notes  of 
James  Wallace,  payable  at  those  periods  respectively,  in 
full  satisfaction  and  discharge  of  such  debts  ;  and  that 
their  creditors,  including  said  bill-holders,  had  consented 
to  and  agreed  to  accept  such  composition;  and  that  the 
bill-holders  had  received  in  addition  to  this  composition 
four  shillings  in  the  pound  in  money.  Major  &  Wallace 
by  this  deed  assigned  certain  goods  to  certain  trustees 
therein  named,  in  trust  to  sell  and  convert  the  same  into 
money,  and  divide  the  proceeds  among  the  bill -holders, 
parties  to  the  composition  deed;  and  the  bill-holders  cove- 
nanted not  to  sue  Major  &  Wallace  on  said  bills  of 
exchange,  unless  on  default  of  payment  of  the  notes  of 
James  Wallace ;  and  that  upon  payment  of  those  notes  to 
the  trustees,  the  bill-holders  would  release  Major  & 
Wallace  from  the  said  bills  of  exchange.  Then  followed 
this  clause:  'Provided  always,  and  it  is  hereby  expressly 
agreed  and  declared,  that  it  shall  be  lawful  for  the  said 
bill-holders,  parties  hereto  of  the  second  part,  to  execute 
these  presents  without  prejudice  to  their  rights  and  reme- 
dies upon  the  said  bills,  mentioned  in  the  second  schedule 
hereunder  written,  respectively,  or  upon  collateral  or  other 
securities  for  the  same,  respectively,  against  any  person  or 
persons  whomsoever  other  than  the  said  IMcKedy  Major 
and  James  Wallace,  or  either  of  them,  their  or  either  of 
their  heirs,  executors,  and  administrators;  and  that  not- 
withstanding these  presents,  or  anything  herein  con- 
tained, they,  the  said  bill-holders  respectively,  and  their 
respective  executors,  administrators,  and  assigns,  shall  be 
at  liberty  to  enforce  and  adopt  all  or  any  of  such  rights  or 


SOHIER  V.  LORING.  337 

remedies,  against  any  such  other  person  or  persons,  in  the 
same  manner  as  if  these  presents  had  not  been  executed.' 
And  the  bill-hoklers  covenanted  to  indemnify  the  trustees, 
from  all  claims  for  or  on  account  of  the  goods  assigned 
to  them  in  trust,  or  the  payment  of  any  dividend  out  of  the 
proceeds  thereof. 

The  dividends,  which  were  made  under  this  indenture, 
amounting  to  four  shillings  in  the  pound,  have  been 
received  by  the  appellees  respectively. 

On  the  4th  of  August,  1847,  the  appellant,  as  the 
assignee  of  Green  &  Company,  filed  with  the  master  in 
chancery  a  written  motion,  that  the  claims  of  the  several 
appellees  should  be  expunged  from  the  list  of  debts  proved 
against  Green  &  Company;  or,  if  not  expunged,  that 
they  should  be  reduced  in  amount,  by  deducting  therefrom 
the  payments  received  by  the  appellees,  respectively, 
under  the  provisions  of  the  composition  deed;  but  the 
master,  after  due  hearing,  overruled  the  motion,  and  the 
assignee  appealed  to  this  court. 

It  was  agreed,  that  if  the  court  should  sustain  the 
master's  decision,  judgment  should  be  entered  for  the 
appellees;  but  if  the  court  should  reverse  the  decision  of 
the  master,  the  case  might  be  sent  to  a  jury,  to  be  tried  on 
such  issue  or  issues  as  the  court  should  direct,  or  other- 
wise disposed  of  as  they  should  determine. 

The  case  was  argued  in  writing. 

Metcalf,  J.,  for  the  court. — The  composition  made 
with  the  acceptors  would  have  discharged  the  drawers  and 
indorsers,  if  there  had  not  been  inserted  in  the  composi- 
tion deed  a  proviso  that  it  should  not  prejudice  the  holders' 
remedies  against  any  other  parties  besides  the  acceptors. 
Bayley  on  Bills  (2d  Amer.  ed."),  357,  358.  The  first  ques- 
tion in  the  case  therefore  is,  what  is  the  legal  effect  of  that 
proviso  ? 

It  is  settled  in  England  that  a  discharge  or  giving 
time  by  a  creditor  to  his  principal  debtor,  will  not  dis- 

22 


338  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

charge  tlie  surety,  if  there  be  an  agreement  between  the 
creditor  and  the  principal  debtor  that  the  surety  shall  not 
be  discharged.  And  this  rule  of  law  is  applicable  to  par- 
ties to  bills  of  exchange  and  promissory  notes,  who  are 
liable  only  on  the  failure  of  prior  parties,  though  they  are 
not  technically  sureties  of  those  parties.  1  Steph.  X.  P. 
936;  Montagu  on  Composition,  36;  Burge  on  Suretyship, 
210;  Chit,  on  Bills  (10th  Amer.  ed.),  420;  Byles  on  Bills 
(2d  Amer.  ed.),  202.  See  also  Mallet  v.  Thompson,  5  Esp. 
R.  178.  The  same  doctrine  was  advanced  by  Messrs. 
Hamilton  and  Eiker,  in  argument,  and  was  recognized  by 
the  Supreme  Court  of  New  York,  in  Stewart  v.  Eden,  2 
Caines,  121,  very  soon  after  it  had  been  laid  down  b}^  Lord 
Eldon,  in  Ex  parte  Gifford,  6  Ves.  805.  In  this  last  case. 
Lord  Eldon  said  sureties  would  not  be  discharged  by  a  dis- 
charge of  the  principal,  if  there  was  'a  reserve  of  the 
remedy  '  against  the  suret}',  and  that  Lord  Thurlow  had  so 
admitted  in  a  previous  case  not  reported.  He  afterAvards 
laid  down  this  principle  more  authoritatively  in  Boultbee 
V.  Stubbs,  18  Ves.  20,  and  Ex  parte  Carstairs,  1  Buck, 
560.  In  Ex  parte  Glendinning,  1  Buck,  517,  he  said :  '  If 
a  man  by  deed  agree  to  give  his  principal  debtor  time, 
and  in  the  deed  expressly  stipulate  for  the  reservation  of 
all  his  remedies  against  other  persons,  they  shall  still 
remain  liable,  notwithstanding  the  arrangement  between 
their  principal  and  the  creditor.' 

In  Xichols  V.  Norris,  3  Barn,  &  Adolph.  41 ,  the  Court  of 
King's  Bench  decided  that  a  composition  like  that  in  the 
present  case,  made  with  the  indorser  of  a  note  given  for 
his  accommodation,  did  not  discharge  the  maker.  It  was 
said  by  the  court,  that  such  composition  deeds  were  very 
common,  and  that  the  special  proviso  took  the  case  out  of 
the  common  rule  as  to  the  discharge  of  sureties  by  giving 
time  to  the  principal. 

In  1846,  the  case  of  Kearsley  v.  Cole,  16  Mees.  &  Welsh. 
128,  came  before  the  Court  of  Exchequer.  That  was  an 
action  for  money  paid   for  the  defendant,  for  whom   the 


SOHIER  V.  LORING.  339 

plaintiff  had  been  surety.  The  defence  was,  that  the 
defendant  had  made  an  assignment  to  his  creditors,  who 
had  covenanted  not  to  sue  him.  But  it  appeared  that 
there  was  a  proviso,  in  the  deed  of  assignment,  tliat  any 
creditor  might  execute  it  without  prejudice  to  any  specific 
lien  or  securit}^,  or  to  any  chaim  against  any  surety,  and 
that  this  proviso  was  inserted  with  the  knowledge  and 
consent  of  the  plaintiff.  He  was  afterwards  called  on  as 
surety  of  the  defendant,  and  paid  the  claim.  The  ques- 
tion was,  whether  this  paj'ment  was  to  the  use  of  the 
defendant,  or  was  a  voluntar}^  payment,  which  gave  him 
no  right  to  reimbursement.  The  court  held  that  the  plain- 
tiff was  entitled  to  recover ;  he  not  having  been  discharged 
from  his  suretyship  by  the  deed  of  assignment.  The  opin- 
ion of  the  court  was  given  by  Mr.  Baron  Parke,  who  fully 
and  clearly  stated  the  decisions,  and  the  principles  upon 
which  they  were  made,  as  follows :  '  The  question  is,  what 
is  the  effect  of  a  discharge  with  reserve  of  remedies  con- 
sented to  by  the  surety?  We  do  not  mean  to  intimate  any 
doubt  as  to  the  effect  of  a  reserve  of  remedies  without  such 
consent ;  and  the  eases  are  numerous  that  it  prevents  the 
discharge  of  a  surety,  which  would  otherwise  be  the  result 
of  a  composition  with,  or  giving  time  to,  a  debtor,  by  a 
binding  instrument;  and  the  reserve  of  remedies  has  that 
effect  upon  this  principle,  —  first,  that  it  rebuts  the  impli- 
cation that  the  surety  was  meant  to  be  discharged,  which 
is  one  of  the  reasons  why  the  surety  is  ordinarily  exoner- 
ated by  such  a  transaction ;  and,  secondly,  that  it  prevents 
the  rights  of  the  surety  against  the  debtor  being  impaired, 
the  injury  to  such  rights  being  the  other  reason ;  for  the 
debtor  cannot  complain  if,  the  instant  afterwards,  the 
surety  enforces  those  rights  against  him;  and  his  consent 
that  the  creditor  shall  have  recourse  against  the  surety  is, 
impliedly,  a  consent  that  the  surety  shall  have  recourse 
against  him.  This  is  the  effect  of  what  Lord  Eldon  says 
in  Ex  parte  Gifford,  and  Boultbee  v.  Stubbs,  as  to  the 
reserve  of   remedies;   and  the  general   proposition,    that, 


840  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

with  that  recourse,  the  composition  or  giving  time  does 
not  discharge  the  surety,  is  supported  by  those  and  tlie 
following  cases:  Ex  parte  Glendinning;  Nichols  v.  Norris; 
Smith  V.  Winter,  4  Mees.  &  Welsb.  454,  and  others.  This 
point  must,  therefore,  be  considered  as  settled.  Some 
remarks  have,  indeed,  been  made  by  Lord  Denman,  in  the 
case  of  Nicholson  v.  Kevill,  4  Adolph.  &  Ellis,  675,  on 
the  doctrine  of  Lord  Eldon  in  Ex  parte  Gifford,  throwing 
doubt  on  its  correctness,  on  the  supposition  that  Lord 
Eldon  had  held  that  a  creditor  could  release  one  joint  and 
several  debtor,  and  hold  another  liable  by  a  reserve  of 
remedies;  which  would  certainly  be  against  the  decision 
in  Cheetham  v.  Ward,  1  Bos.  &  Pul.  630,  unless  the  instru- 
ment of  release  could,  by  reason  of  the  context,  be  con- 
strued to  be  a  covenant  not  to  sue,  as  it  was  in  the  case  of 
Solly  V.  Forbes,  2  Brod.  &  Bing.  38.  But  we  consider  it 
clear  that  Lord  Eldon  meant  only  to  apply  the  doctrine  to 
cases  where  there  was  no  release,  but  a  composition,  or 
giving  time,  not  amounting  to  a  release,  which  is  the 
present  case ;  and,  with  reference  to  it,  the  rule  laid 
down  by  Lord  Eldon  is  not  impeached  by  Lord  Denman's 
remarks.'  And  the  decision  of  the  court  was,  that  the 
suret3^'s  consent  to  the  creditors'  reserve  of  their  remedy 
against  him  did  not  alter  the  law  of  the  case  in  favor  of 
the  principal. 

These  doctrines  were  incidentally  recognized  by  Mr. 
Justice  Wilde  in  American  Bank  v.  Baker,  4  Met.  175,  and 
were  adopted  and  applied  by  the  Court  of  Appeals  of  Mary- 
land, in  Clagett  v.  Salmon,  5  Gill  &  Johns.  314. 

It  is  very  obvious,  that  a  principal  debtor  may  gain 
little  or  nothing  by  such  a  composition  as  this  with  his 
creditor;  inasmuch  as  he  is  left  liable  to  the  like  proceed- 
ings against  him  by  his  sureties,  which  his  creditor  might 
have  instituted  if  no  composition  had  been  made.  But  if 
he  pleases  to  subject  himself  to  that  liability,  by  volunta- 
rily executing  an  agreement  which  has  that  effect,  there 
is  no  legal  reason  why  he  should  not  be  held  to  that 
agreement. 


SOHIER  V.  LORING.  341 

On  these  grounds,  we  are  of  opinion  that  the  holders  of 
the  bills,  in  the  present  case,  were  rightly  permitted  by 
the  master  to  prove  their  claims  thereon  against  the 
drawers  and  iudorsers;  the  latter  not  having  been  dis- 
charged by  the  composition  made  by  the  former  with  the 
acceptors. 

The  second  question  respects  the  amount  which  the 
holders  were  entitled  to  prove  against  the  drawers  and 
indorsers.  And  we  are  of  opinion  that  each  was  entitled 
to  prove  the  full  sum  due  and  unpaid,  at  the  time  of  mak- 
ing proof,  on  the  bill  or  bills  held  by  him.  This  question 
is  not  settled  by  any  provision  in  our  insolvent  laws ;  and 
we  therefore  adopt  the  rule  applied  in  bankruptcy.  That 
rule  is,  that  a  holder  may  prove  his  claim,  under  com- 
missions against  the  drawer,  acceptor,  and  indorser,  and 
receive  a  dividend  from  each  upon  his  whole  claim,  pro- 
vided he  does  not  receive,  in  the  whole,  more  than  his  full 
due.  But  there  is  a  distinction  in  this  case,  when  a  holder 
applies  to  prove  his  debt  against  one  party,  after  having 
received  a  part  of  it  from  another,  and  when  he  applies  to 
prove  before  receiving  any  payment  or  composition  from 
another  party,  or  before  a  dividend  has  been  declared  in 
his  favor,  under  a  commission  against  another  party. 
Any  sum  actually  received  in  payment,  from  any  party 
to  a  bill,  before  proof  made  against  another,  must  be 
deducted  from  the  amount  to  be  proved  against  any  other 
party.  So,  as  a  general  rule,  must  the  amount  of  a  divi- 
dend, declared  on  the  estate  of  another  party,  be  deducted. 
Cooper  V.  Pepys,  and  Ex  parte  Wildman,  1  Atk.  107,  109 ; 
see  5  Ves.  (Perkins's  ed.)  449,  note;  Eden's  Bankr.  Law 
2d  ed.),  155;  1  Mont.  &  Ayrt.  Pract.  in  Bankruptcy,  202, 
203. 

In  the  present  case,  we  regard  the  composition  made 
with  the  acceptors,  on  the  23d  of  December,  1846,  as  pay- 
ment of  one  fifth  of  the  amount  of  the  bills.  The  acceptors 
then  conveyed  property  in  trust  to  pay  one  fifth,  and  the 
holders  accepted   that  conveyance.     But  all   the   holders. 


342  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

except  May  &  Company,  made  proof  of  their  claims 
against  the  estate  of  Green  &  Short,  drawers  or  indorsers, 
before  they  made  the  composition  with  the  acceptors,  and 
were  therefore  entitled,  according  to  the  rule  just  stated, 
to  prove  the  full  amount  then  due  on  their  bills.  May 
&  Company  having  made  proof  after  they  had  executed 
the  composition  deed,  by  which  they,  in  legal  effect,  had 
received  part  payment  from  the  acceptors,  were  entitled  to 
prove  only  the  amount  due  after  deducting  that  payment. 

The  proceedings  of  the  master,  from  which  this  appeal 
was  taken,  are  aflBrmed  in  all  things,  excejDt  as  to  the 
amount  proved  by  May  &  Company,  which  is  to  be  reduced 
by  deducting  the  sum  received  by  them  under  the  composi- 
tion with  the  acceptors. 


FARMERS'  AXD  MECHANICS'  BANK  v. 
RATHBOXE. 

Supreme  Court  of  Vermont,  1852.     26  Vt.  19. 

One  who  for  value  has  taken  a  bill  of  exchange  accepted  for  the  accom- 
modatiou  of  the  drawer,  without  notice  of  the  fact,  may  afterwards  release 
the  drawer  without  discliargiug  the  acceptor,  though  he  then  have  notice 
of  the  nature  of  the  acceptance. 

Assumpsit  on  two  bills  of  exchange  for  $600  each, 
accepted  by  the  defendant,  payable  to  order  and  indorsed 
before  maturity,  for  value  and  without  notice,  to  the 
plaintiff.  Defence,  that  the  bills  were  accepted  without 
consideration  for  the  accommodation  of  the  drawer,  Caleb 
E.  Barton,  and  that  the  plaintiff  released  and  discharged 
the  drawer  after  having  acquired  knowledge  of  the  nature 
of  the  acceptance.  The  release  was  long  after  the  plain- 
tiff's purchase  of  the  bills. 

The  said  release  was  as  follows : 

'  In  consideration  of  .^500  to  the  Farmers'  'and  Mechanics' 
Bank,  paid  bj'  Caleb  E.  Barton,  of  Charlotte,  the  said 
bank  hereby  wholly  release  and  discharge  the  said  Barton 


FARMERS'  AND  MECHANICS'  BANK  v.  RATHBONE.     343 

from  all  liability  or  indebtedness  to  said  bank,  which  said 
bank  have  or  may  claim  to  have  for,  or  on  account  of,  any 
and  all  notes,  cheques,  drafts,  or  bills  of  exchange  or 
acceptances  to  which  Henry  Rathbone  is  in  any  wise  a 
party,  either  as  maker,  drawer,  indorser,  or  acceptor  or 
payee  or  drawee,  and  also  from  all  liability  on  any  paper 
which  has  been  sued  against  said  Barton  in  favor  of  said 
bank,  or  any  other  paper  said  bank  may  have  against 
Barton,  previous  to  the  17th  of  March  instant,  which  said 
Eathboue  was  or  is  any  wise  a  party  to. 

'  In  witness  whereof,  we  have  hereunto  affixed  the  seal 
of  said  bank,  at  Burlington,  this  thirtieth  day  of  March, 
A.D.  1848. 

(Signed)      '  Farmers'  and  Mechanics'  Bank.       [l.s.] 
By  John  Peck,  Pres't.' 


( 


The  County  Court  rendered  judgment  for  the  defendant. 
Exceptions  by  plaintiffs. 

IsHAM,  J.,  for  the  court. — This  action  is  brought  on 
two  bills  of  exchange,  drawn  by  Caleb  E.  Barton  on  the 
defendant,  Henry  Rathbone,  of  the  city  of  New  York; 
both  of  which  were  duly  accepted,  and,  before  maturity, 
were  discounted,  and  transferred  by  indorsement  to  the 
plaintiffs.  When  the  bills  matured,  they  were  dishonored, 
duly  protested,  and  notice  thereof  given  to  the  drawer. 

On  the  trial  of  the  case,  at  the  circuit,  the  defendant 
insisted  that  the  bills  were  accommodation  bills;  and, 
upon  the  facts  stated  in  the  bill  of  exceptions,  he  now 
insists  that  the  bills  are  of  that  character,  that  the  drawer 
is  the  person  primarily  liable,  that  the  acceptor  stands  as 
his  surety,  and  that  the  release  of  the  drawer  by  the 
plaintiffs  operates  as  a  discharge  of  the  defendant  as 
acceptor.  It  is  admitted  that  if  these  bills  are  not  accom- 
modation bills,  but  are  really  bills  for  value,  the  release 
will  not  affect  the  liability  of  the  acceptor.  It  will  dis- 
charge all  persons  intermediate  between  the  holders  and 


344  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

drawer,  but  not  those  prior  on  the  bills,  nor  those  on  whom 
rests  a  primary  or  absolute  liability  to  pay  them.  English 
V.  Derby,  2  B.  &  P.  61;  Bailey,  J.,  in  Claridge  v.  Dalton, 
4  Moore  &  S.  226;  Chitty,  Bills,  451. 

We  are  satisfied  that  these  bills  are  not  to  be  treated  as 
accommodation  papers.  It  is  true  the  fact  is  i'ound  in  the 
case,  '  that,  at  the  maturity  of  the  bills,  the  drawer  was 
indebted  to  the  acceptor  on  account,  apart  from  the  bills 
in  suit,  and  that  the  latter  had  no  funds  in  his  hands  of 
the  former,  wherewith  to  meet  them.'  But,  in  connection 
with  this  statement,  it  equally  appears  from  the  exceptions 
that,  during  the  season  of  1844,  the  drawer  at  different 
times  consigned  to  the  defendant  as  commission  mer- 
chant, for  sale  on  his  account,  a  quantity  of  cheese,  the 
gross  proceeds  of  which  amounted  to  $7,848.78;  and, 
from  the  statement  in  the  account  of  sales,  we  perceive 
that  a  much  larger  amount  than  the  sum  of  these  bills  was 
realized  therefrom,  after  these  acceptances  were  given. 
The  account  arising  from  the  sale  of  this  property  com- 
menced in  July,  1844,  and  closed  in  November  of  that 
year.  There  has  been  no  statement  of  that  account  ren- 
dered, or  balance  ascertained  by  the  parties.  As  between 
them,  the  whole  account  remains  open  and  subject  to  their 
future  liquidation.  While  this  account  was  accruing, 
these  bills  were  drawn  and  accepted,  obviously  and  with 
the  understanding  that  they  were  to  be  paid  by  the 
defendant,  and  the  amount  so  paid  be  entered  into  their 
general  account. 

During  that  period  they  doubtless  anticipated  that  the 
balance  would  be  sufficient  to  pay  these  bills,  and  have 
been  respectively  disappointed  in  the  amount  finally  real- 
ized therefrom;  so  that  there  is  now  a  balance  due  the 
acceptor,  as  stated  in  the  account  of  sales.  But  as  these 
bills,  at  first,  were  drawn  upon  property  consigned  to  the 
acceptor,  and  he  accepted  them  with  the  same  means  of 
knowledge  which  the  drawer  had,  and  thereby  assumed 
the  primary  obligation  to  pay  them,  there  is  no  propriety 


FARMERS'  AND  MECHANICS'  BANK  v.   RATHBONE.  345 

in  treating  the  bills  otherwise  than  as  creating  obligations 
of  that  character,  after  they  have  passed,  in  due  course  of 
business,  into  the  hands  of  an  indorsee.  In  so  treating 
them,  we  are  manifestly  carrying  into  effect  the  mutual 
intention  of  the  parties  when  the  bills  were  drawn  and 
accepted;  for  it  is  distinctly  stated  in  the  case  that  both 
the  drawer  and  the  drawee  supposed  and  believed  that 
there  were  funds  sufficient  in  the  hands  of  the  drawee  to 
pay  them  at  maturity,  and  under  that  belief  the  drawer 
made  such  representations  to  the  plaintili's,  at  the  time  of 
their  indorsement  and  discount. 

The  legal  effect  and  character  of  bills  of  exchange,  so 
draAvn  and  accepted,  is  not  changed  or  affected  by  any 
alteration  of  the  balance  of  the  account,  nor  even  by  the 
fact,  if  it  should  be  afterwards  ascertained,  that  there  was 
an  indebtedness,  at  the  time  of  the  acceptance,  from  the 
drawer  to  the  acceptor.  This  principle  is  fully  illustrated 
by  the  case  of  Bagnall  v.  Andrews,  7  Bing.  217.  Indeed, 
the  facts  in  that  case,  and  the  principles  there  established, 
have  such  a  direct  application  to  this  case,  that  we  cannot 
consider  these  bills  otherwise  than  as  bills  for  value,  with- 
out entirely  disregarding  the  authority  and  principles  of 
that  decision.  In  that  case,  when  the  bill  was  drawn,  the 
drawer  had  an  open  account  with  the  acceptor,  for  goods 
which  he  was  in  the  course  of  sending  to  him  for  sale; 
neither  of  them  at  that  time  knew  the  state  of  the  account; 
'  and  it  afterwards  turned  out  that  the  drawer  was,  at  the 
time  of  the  acceptance,  indebted  to  the  acceptor,  instead 
of  the  acceptor  being  indebted  to  the  drawer.'  Before  the 
bill  became  due,  the  drawer  became  bankrupt,  and  indorsed 
the  bill  to  the  plaintiff,  who  was  ignorant  that  an  act  of 
bankruptcy  had  been  committed.  The  drawer  being  called 
as  a  witness  was  objected  to  as  being  interested,  on  the 
ground  that  this  was  an  accommodation  bill,  and  that,  if 
the  plaintiff  recovered,  he  would  be  responsible  to  the 
defendant,  not  only  for  the  amount  of  the  bill,  but  for  the 
costs  of  that  suit.     Tindal,  C.   J.,  after  remarking  that 


346  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

such  consequeuces  would  follow  if  this  was  an  accommo- 
dation bill,  and  that  the  witness  would  be  incompetent, 
observed  'that,  we  think,  upon  the  facts  in  the  case,  the 
bill  was  not  an  accommodation  bill.  At  the  time  it  was 
drawn,  the  drawer  had  an  open  account  with  the  defendant 
for  goods  sent,  and  which  he  was  then  in  the  course  of 
sending  to  him  for  sale.  The  drawer  might,  at  that  time, 
reasonably  expect  that  the  acceptor  would  pay  the  bill  out 
of  funds  that  might  be  in  his  hands,  when  the  bill  arrived 
at  maturity;  for  the  evidence  is  express  that,  at  the  time 
the  bill  was  drawn,  neither  the  drawer  nor  acceptor  knew 
the  state  of  the  account.  A  bill  so  drawn  and  accepted 
cannot  be  treated  as  an  accommodation  bill,  nor,  conse- 
quently, is  there  any  implied  obligation,  on  the  part  of  the 
drawer,  to  indemnify  the  acceptor  against  the  costs  of  any 
action  which  may  be  brought  against  him.'  1  Phil.  Evid. 
61;  9  Serg.  &  Kawle,  237. 

If  that  case  is  to  be  treated  as  sound  in  principle,  it 
makes  a  final  disposition  of  the  case  under  consideration ; 
for  under  that  authority,  these  bills  cannot  be  considered 
as  accommodation  bills,  but  must  be  treated  as  bills  for 
value;  the  acceptor  being  the  party  primarily  liable,  and 
the  drawer  considered  only  as  his  surety  or  guarantor.  In 
such  case,  it  was  properly  remarked  that  the  release  of  the 
drawer  was  a  relinquishment  merely  of  so  much  security 
which  the  plaintiffs  had  for  the  payment  of  the  debt,  and 
which  in  no  event  can  affect  the  liability  of  the  accej)tor. 

It  is  very  evident,  also,  that  the  plaintiffs  could  have 
sustained  no  action  against  the  drawer  of  these  bills, 
unless  they  had  been  duly  protested  and  notice  given. 
This  principle  is  founded  on  the  consideration  that  a 
primary  liability  for  their  payment  rests  only  upon  the 
acceptor;  while  that  of  the  drawer  is  contingent  and  col- 
lateral, and  arises  upon  the  default  of  the  acceptor.  The 
necessity  of  protest  and  notice  in  such  cases  is  not  avoided 
by  a  fluctuating  balance  in  their  accounts,  nor  even  by  the 
fact,  where  there  exists  an  open  account,  that  there  is  an 


FARMERS'  AND  MECHANICS'  BANK  v.   RATHBONE.  347 

indebtedness  from  the  drawer  to  the  acceptor.  Orr  v. 
Maginnis,  7  East,  359;  Blackhaw  v.  Doren,  2  Camp.  503; 
In  re  Brown,  2  Story's  C.  C.  502,  521;  Story,  Bills,  §  311; 
2  Smith's  Lead.  Cas.  29;  Smith's  Merc.  Law,  315;  15 
Peters,  393. 

But  if  these  bills  are  to  be  regarded  strictly  as  accom- 
modation bills  the  same  result,  we  think,  must  follow.  In 
such  case  it  is  insisted  that  the  drawer  is  the  jDerson 
primarily  liable;  that  the  acceptor  is  to  be  treated  as  his 
surety;  and  that  the  holder  of  the  bills  is  bound  so  to 
regard  and  deal  with  them,  notwithstanding  the  terms 
of  the  bill,  whenever  he  has  notice  that  the  accept- 
ance was  for  accommodation,  whether  that  notice  was 
received  at  the  time  he  took  the  bills  or  at  any  subsequent 
period. 

It  is  proper  to  observe  that  this  question  does  not  now 
arise  between  the  drawer  and  acceptor;  as  between  them 
the  consideration  may  be  inquired  into  and  the  true  rela- 
tion of  the  parties  shown;  but  the  question  is  presented  in 
a  case  between  the  acceptor  and  an  indorsee  for  value 
without  notice  that  the  bill  was  for  accommodation  at  the 
time  he  became  the  holder.  When  these  bills  were 
received  by  the  plaintiffs,  they  were  invested  with  those 
legal  rights,  and  became  subject  only  to  those  duties,  that 
arose  from  what  appeared  on  the  face  of  the  bills.  Their 
legal  effect  and  the  relative  liability  of  the  drawer  and 
acceptor  could  not  be  changed  or  altered  by  any  fact  not 
then  appearing. 

These  principles  have  a  peculiar  application  to  bills  of 
exchange,  as  they  are  designed  for  commercial  purposes; 
and  their  application  is  required  to  impart  to  them  that 
credit  and  currency  which  is  necessary  to  insure  the  pur- 
poses for  which  they  were  intended.  At  the  time  the 
plaintiffs  became  indorsees  they  had  the  right,  on  the  one 
hand,  and  were  bound,  on  the  other,  both  at  laAV  and  in 
equity,  to  regard  the  acceptor  as  primarily  liable,  and  the 
drawer  as  his  surety ;  they  could  have  released,  compounded 


348  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

with,  or  given  time  to  the  drawer,  without  in  any  way 
affecting  tlieir  right  to  hold  the  ultimate  liability  of  the 
acceptor.  Story,  Bills,  §§  429,  430;  15  Peters,  393;  1 
Mees.  &  W.  374.  Such  being  their  right  at  the  time  they 
became  the  holders  of  the  bills,  there  is  no  propriety  or 
authority  in  saying  that  that  right  can  be  subsequently 
changed,  or  affected  by  a  mere  notice  from  the  acceptor  to 
the  holder  that  the  drawer  had  neglected  to  provide  funds 
for  the  payment  of  the  bills ;  or  by  any  act  of  the  drawer 
and  acceptor  to  which  the  plaintiffs  were  not  a  party,  and 
to  which  they  have  never  given  their  assent.  Theob.  on 
Pr.  &  Sur.  216. 

The  plaintiffs,  as  holders  of  these  bills,  were  not  sub- 
ject to  any  of  the  equities  existing  between  the  original 
parties,  and  without  their  assent  those  equities  cannot  be 
imposed  upon  them.  The  case  of  Mallet  v.  Thompson,  5 
Esp.  178,  was  an  action  by  an  indorsee  against  the  maker 
of  an  accommodation  note  for  the  payee.  The  holder 
received  part-payment,  under  a  composition  from  the 
payee,  and  covenanted  not  to  sue  him,  which  is  a  virtual 
release,  knowing  when  he  received  the  bill  that  it  was 
given  for  accommodation.  Lord  Ellenborough  ruled  that 
the  maker  was  liable,  notwithstanding  the  payment  and 
release;  for  his  liability  on  the  face  of  the  note  was  pri- 
mary and  principal,  and  that  of  the  indorsers  was  collateral 
and  secondary;  and,  whatever  may  be  their  liabilities 
between  themselves,  such  was  their  liability  to  the  holder. 
It  was  also  held  that  the  release  would  have  no  effect 
between  the  maker  and  payee;  for  whatever  the  maker 
was  compelled  to  pay  he  might  call  upon  the  payee  to 
repay;  the  release  in  no  way  disturbed  their  relations. 
On  the  application  of  the  same  rule  to  this  case,  whatever 
the  acceptor  may  be  compelled  to  pay,  he  can  call  upon  the 
drawer  to  repay,  notwithstanding  the  release;  for  their  re- 
lations are  not  disturbed  by  its  execution.  It  is  evident, 
also,  in  this  case,  from  the  release  itself,  that  a  discharge 
of  the  bill  was  not  intended  by  the  parties,  but  simply  a 


FARMERS'  AND  IMECHANICS'  BANK  v.  RATHBONE.    349 

release  of  the  drawer,  by  the  holders,  from  any  farther 
claim  which  they  had  personally  on  him,  leaving  the 
holders  to  pursue  their  remedy  against  the  acceptor  as  the 
party  primarily  liable.     Story,  Promissory  Notes,  §  423. 

In  the  case  of  Laxton  v.  Peat,  2  Camp.  185,  and  Collett 
V.  Haigh,  3  Camp.  281,  a  different  doctrine  was  applied 
to  accommodation  bills,  where  the  holder,  at  the  time  he 
received  the  bills,  knew  that  they  were  for  the  accommo- 
dation of  the  drawer.  Lord  Ellenborough  remarked  '  that 
as  it  was  an  accommodation  bill,  of  which  all  parties  had 
notice,  the  acceptor  can  only  be  considered  as  a  surety  for 
the  drawer;  '  and  the  acceptor  was  discharged  by  time 
being  given  the  drawer.  If  these  cases  can  be  sustained 
on  principle,  they  have  no  application  to  this  case;  for  it 
may  be  said  with  more  propriety  that  if  one  take  a  bill  of 
exchange,  knowing  at  the  time  that  it  was  for  accommoda- 
tion, he  thereby  assents  to  receive  and  hold  it  subject  to 
that  equity  of  the  parties ;  while  no  such  suggestions  can 
be  made  in  this  case,  as  these  plaintiffs  had  no  such  notice 
when  the  bills  were  received  and  discounted. 

The  doctrine  of  those  two  cases  was,  however,  subse- 
quently shaken  by  Justice  Gibbs,  in  Kerrison  v.  Cooke, 
3  Camp.  362,  and  was  afterwards  overruled  in  the  Common 
Pleas,  in  the  case  of  Pentum  v.  Pocock,  5  Taunt.  192,  in 
which  ISIansfield,  C  J.,  observed  '  that  the  case  of  Laxton 
V.  Peat  was  the  first  in  which  it  was  held  that  the  acceptor 
was  not  the  first  and  last  person  compelled  to  pay  the  bill 
to  the  holder ;  and  that  they  were  compelled  to  differ,  and 
hold  that  it  is  impossible  to  consider  the  acceptor  of  an 
accommodation  bill  in  the  light  of  a  surety  for  the  drawer; 
and  that,  if  the  holder  had  known  in  the  clearest  manner 
that  at  the  time  of  giving  the  bill  it  was  for  accommoda- 
tion, it  would  make  no  manner  of  difference.'  With  this 
view  of  the  case,  Heath,  J.,  and  Chambre,  J.,  agreed.  It 
will  be  at  once  perceived  that  in  this  case  the  acceptor  was 
held  as  the  principal  and  primary  debtor  on  an  accommo- 
dation  bill,  known   to   be  such   bv  the   holder  when  he 


350  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

received  it,  and  that  act  of  the  holder,  which  would  have 
discharged  a  surety,  was  held  not  to  affect  his  liability. 
We  are  not  called  upon  in  this  case  to  approve  or  disap- 
prove of  the  doctrine  of  that  case  to  the  extent  to  which  it 
was  carried;  but  it  is  a  decided  authority  for  saying  that 
an  indorsee  for  value  of  a  bill  of  exchange,  who  became 
such  before  its  maturity  and  in  ignorance  that  it  was  given 
for  accommodation,  has  a  right  to  treat  all  parties  thereon 
as  liable  to  him  according  to  their  relative  positions  on  the 
bill,  and  to  regard  the  acceptor  as  the  principal  debtor, 
and  the  liability  of  the  drawer  as  collateral;  and  that  this 
right  is  unaffected  by  any  subsequently  acquired  know- 
ledge that  the  bill  was  given  for  accommodation.  In  such 
cases,  it  is  regarded  as  a  mere  truism  to  say  that  a  release 
of  the  drawer  by  the  holder  has  no  effect  on  the  ultimate 
liability  of  the  acceptor. 

The  case  of  Fentum  v.  Pocock  has  been  sustained  and 
approved  by  the  subsequent  cases  in  England.  Price  v. 
Edmonds,  10  Barn.  &  C.  578,  584;  Nichols  v.  Norris,  3 
Barn.  &  Adol.  41;  Harrison  v.  Courtauld,  3  Barn.  &  Adol. 
36;  Rolfe  v.  Wyatt,  5  Car.  &  P.  181;  Moody  &  M.  14; 
Yallop  V.  Ebers,  1  Barn.  &  Adol.  698,  703.  It  is  to  be 
observed  also  that  the  same  view  of  the  subject  is  enter- 
tained by  the  different  elementary  authors.  Chitty,  Bills, 
344;  Smith's  Merc.  Law,  332;  3  Kent's  Com.  104;  Bayley, 
Bills,  364;  Story,  Promissory  Notes,  §§  418,  423. 

This  subject  has  arisen  before  many  of  the  courts  in  this 
country,  and  the  rule  is  generally  sustained  '  that  the 
parties  to  a  bill  or  note  are  bound  by  the  character  which 
they  assume  upon  the  face  of  the  bill.  If  by  that  they 
are  liable  as  primary  debtors  or  as  principal,  then,  as  to 
the  holders,  they  are  bound  as  such;  and  his  knowledge 
at  the  time  when  he  takes  the  bill  that  they  or  either  of 
them  are  accommodation  parties  will  not  vary  the  case.' 
Montgomery  Bank  v.  Walker,  9  Serg.  &  Rawle,  229;  s.  c. 
12  Serg.  &  Rawle,  382;  White  v.  Hopkins,  3  Watts  & 
Serg.  99;  Lewis  v.  Hanchman,   2  Barr,  416;  Commercial 


FARMERS'  AND  MECHANICS'  BANK  v.  RATHBONE.     351 

Bank  v.  Cunningham,  24  Pick.  270,  275;  Church  v.  Barlow, 
9  Pick.  547,  551;  In  re  Babcock,  3  Story's  C.  C.  393; 
Sanford  v.  Lambert,  2  Blackf.  137;  Clopper,  Adm'r,  v. 
Union  Bank  of  Maryland,  7  Har.  &  J.  92. 

In  the  case  of  Claremont  Bank  v.  Wood,  10  Vt.  582, 
where  several,  some  of  whom  were  sureties,  signed  a  note, 
'each  as  principals,'  and  promised  to  pay,  it  was  held 
that,  as  to  the  holders,  they  were  to  be  regarded  as  princi- 
pals, and  not  as  sureties;  and  yet  the  primary  liability  of 
the  acceptor,  and  the  secondary  liability  of  the  drawer,  is 
as  expressly  set  forth  on  these  bills  as  if  it  were  written 
out  in  full  over  their  respective  signatures.  In  either 
case,  to  vary  their  respective  liabilities,  as  they  have 
assumed  them  on  the  face  of  the  bills  and  notes,  would  be 
to  vary  and  control  their  intended  operation,  and,  in  effect, 
to  enforce  a  contract  which  the  parties  never  made. 

On  this  subject,  it  is  important  to  observe  a  material 
distinction  between  joint  and  several  promissory  notes  or 
obligations,  and  bills  of  exchange  or  notes  on  which  the 
parties  have  assumed  only  successive  liabilities.  In  the 
former  case,  as  between  the  makers  and  the  holders,  who 
at  the  time  received  the  note  with  notice  of  the  circum- 
stances under  which  it  was  given,  the  strict  relation  of 
principal  and  surety  may  exist,  and  evidence  of  that  fact 
is  not  considered  as  contradicting  its  specific  provisions, 
but  as  consistent  with  its  terms ;  and  the  right  of  contri- 
bution arising  out  of  that  relation  exists  between  them. 
2  Am.  Lead.  Cas.  289,  303,  in  notes.  But  the  drawer  and 
acceptor  and  indorsers  of  a  bill  or  note  have  not  assumed 
a  joint  and  several  liability,  neither  are  they  strictly  sure- 
ties, but  are  liable  to  each  other  in  the  order  of  their 
becoming  parties;  and  when  the  action  is  on  the  bill  or 
instrument,  creating  such  successive  liabilities  by  an 
indorsee  for  value,  without  notice  that  the  bill  was  given 
for  accommodation,  such  testimony  is  inadmissible  for  the 
purpose  of  converting  their  successive  liabilities  into  a 
joint  and  several  obligation,  or  placing  them  in  the  rela- 


352  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

tion  of  principal  and  surety.  The  testimony  clearly  con- 
tradicts the  express  provision  of  the  bill,  and  materially 
changes  its  legal  effect.  Unquestionably  those  liabilities 
may  be  changed  as  between  the  parties  by  an  express  con- 
tract to  that  eifect,  which  may  be  enforced  between  them. 
But  this  in  no  way  affects  the  rights  of  a  holder,  who,  at 
least,  became  such  in  ignorance  of  that  arrangement. 
Under  such  circumstances  the  holder  has  only  to  look  to 
the  bill  itself,  and  the  genuineness  of  the  signatures,  to 
ascertain  the  nature  and  extent  of  the  liability  of  the  par- 
ties thereon;  and  they  are  liable  to  him  in  the  successive 
order  in  which  their  names  appear  upon  the  face  of  the 
bill.  McDonald  v.  Magruder,  3  Peters,  471 ;  Flint  v.  Day, 
9  Vt.  345;  Brown  v.  Mott,  7  Johns.  361. 

This  doctrine  is  sustained  in  Story's  Treatise  on  Prom- 
issory Xotes,  in  which,  §  418,  he  observes,  that  '  the  strong 
tendency  of  the  more  recent  authorities  is  to  hold  that,  in 
all  cases,  the  holder  has  a  right  to  treat  all  the  parties  to 
a  bill  as  liable  to  him  exactly  to  the  same  extent  and  in 
the  same  manner,  whether  he  knows  or  not  the  note  to  be 
an  accommodation  note;  for,  as  to  him,  all  the  parties 
agree  to  hold  themselves  primarily  or  secondarily  liable, 
as  they  stand  on  the  note ;  and  that  they  are  not  at  liberty, 
as  to  him,  to  treat  their  liability  as  at  all  affected  by  any 
accommodation  between  themselves.'  And  in  §  483,  he 
farther  says:  '  ISTor  would  it  make  any  difference  in  the 
case  that  the  released  party  was,  in  point  of  fact,  the  party 
ultimately  bound  to  pay  the  note,  and  that  the  other  party 
was  a  mere  accommodation  maker,  payee,  or  indorser,  for 
his  benefit;  or,  at  least,  it  would  not  make  any  difference, 
unless  the  fact  of  its  being  such  accommodation  note  were, 
at  the  time  of  receiving  the  note,  and  not  merely  at  the 
time  of  the  release,  known  to  the  holder.'  Story,  Bills, 
§§  291,  368,  432,  434.  Chancellor  Kent  (3  Kent's  Com. 
104)  also  observes,  that  'the  acceptor  of  a  bill  is  the 
principal  debtor,  and  the  drawer  the  surety,  and  nothing 
will  discharge  the   acceptor  but  payment  or  a  release. 


FARMERS'  AND  MECII.VNICS'  BANK  v.  RATHBONE.    353 

Accommodation  paper  is  now  governed  by  the  same  tules 
as  other  paper.  This  is  the  latest  and  the  best  doctrine, 
both  in  England  and  this  country.' 

As  these  bills  were  received  and  discounted  by  the  plain- 
tiffs before  their  maturity,  without  notice  that  they  were 
for  accommodation,  we  are  satisfied,  from  the  authorities, 
that  they  had  a  right  to  treat  the  acceptor  as  the  principal 
debtor,  and  the  drawer  as  liable  only  on  his  default.  In 
such  cases,  there  is  no  difference  between  accommodation 
bills  and  bills  for  value:  in  either  case,  a  release  of  the 
drawer  from  any  farther  liability  to  the  holder  will  have 
no  effect,  as  a  discharge  of  the  acceptor  from  his  primary 
liability  on  the  bill;  and  this  right  so  to  treat  the  parties 
on  the  bill  remains  unaffected  by  any  notice  subsequently 
given  that  the  bill  was  for  accommodation. 

It  is  insisted,  however,  that  the  release  of  the  drawer 
will  in  equity  discharge  the  acceptor,  and  that  the  princi- 
ples which  prevail  in  that  court  are  now  equall}'  available 
at  law.  From  an  examination  of  the  cases  in  chancery, 
we  entertain  a  decided  conviction  that  the  same  princi- 
ples, on  this  subject,  prevail  in  equity  as  at  law.  If  any 
diversity  of  opinion  exists  in  that  court  on  this  question, 
it  has  arisen  more  from  a  misapprehension  of  the  rule  at 
law,  and  a  desire  to  conform  to  the  principles  there  estab- 
lished, than  from  any  rules  prevailing  in  equity  at  vari- 
ance with  them.  There  is  much  propriety  in  this;  for  the 
principles  regulating  bills  of  exchange  have  their  origin  in 
mercantile  usage,  and  have  been  adopted  to  meet  the  exi- 
gencies and  wants  of  commercial  transactions ;  it  is  there- 
fore equally  the  policy  of  courts  of  equity,  as  of  courts  of 
law,  to  make  the  application  of  and  enforce  those  prin- 
ciples, in  relation  to  these  securities,  which  experience  has 
found  necessary,  to  preserve  their  negotiability  and  credit. 

In  the  case  of  the  Bank  of  Ireland  v.  Beresford,  6  Dow, 
233,  Lord  Eldon  expressed  his  opinion  of  the  case  of 
Fentum  v.  Pocock,  and  observed  that,  '  if  it  went  on  the 
principle   that  inquiry  is  not  to  be  made  into  the  know- 

23 


354  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

ledge  of  the  party,  but  that  all  shall  be  taken  as  appearing 
on  the  face  of  the  bill,  I  think  it  a  most  wholesome  doc- 
trine.' The  case  is  important  only,  as  showing  the  indi- 
vidual opinion  of  Lord  Eldon  on  that  question,  and  as 
showing  that  no  different  rule  had  then  prevailed  in 
chancery.  In  the  case  of  Glendinuing,  ex  parte,  1  Buck, 
517,  Lord  Eldon  refused  to  adopt  the  principle  of  the 
decision  of  Fentum  v.  Pocock,  and  recognized  the  general 
doctrine  as  held  in  Laxton  v.  Peat.  That  was  the  case 
of  an  accommodation  acceptance,  and  known  to  be  such, 
by  the  holder,  when  he  received  the  bill.  We  are,  there- 
fore, not  called  upon  to  approve  or  disapprove  of  the 
doctrine  of  that  case;  for  in  this  case  the  plaintiffs  had. 
no  notice,  when  the  bills  were  received  and  discounted, 
that  they  were  for  accommodation. 

If  the  plaintiffs  in  this  case  had  received  the  bills  with 
knowledge  that  they  were  given  for  accommodation,  we  do 
not  say  but  that  the  defence  would  be  available ;  for  when 
one  takes  a  bill,  even  before  maturity,,  with  notice  of  a 
given  fact,  it  is  not  unreasonable  that  he  should  be  charged 
with  the  consequences  that  result  therefrom  as  if  the  bill 
had  been  received  overdue.  But  that  principle  does  not 
apply,  when  the  bill  is  taken  before  maturity,  without 
notice  and  for  value;  for  the  bill  is  then  held  independent 
of  all  equities  existing  between  the  original  parties;  and 
Lord  Eldon,  in  that  case,  nowhere  intimates  that  the  prin- 
ciple would  have  such  an  application.  It  is  only  to  the 
case  of  an  accommodation  bill,  and  known  to  be  such  by 
the  holder  when  he  received  the  bill,  that  he  made  the 
application  of  that  rule. 

The  case,  however,  which  should  and  does  exert  a  con- 
trolling influence  in  our  decision  of  this  case  is  that  of 
Harrison  v.  Courtauld,  3  Barn.  &  Adol.  36.  That  case,  it 
will  be  perceived,  was  sent  from  chancery  by  the  Master 
of  the  Rolls,  for  the  opinion  of  the  Court  of  King's  Bench. 
This  circumstance  alone  creates  the  inference  that,  in 
relation  to  bills  of  exchange,  on  which  the  parties  have 


FARMERS'  AND  MECHxiNICS'  BANK  v.  RATHBONE.    355 

assumed  successive  liabilities,  the  princii^les  of  equity  are 
the  same  as  at  law,  and  that,  if  the  acceptor  of  these  bills 
is  not  discharged  at  law,  he  would  not  be  in  equity ;  for  it 
would  be  an  idle  proceeding  for  chancery  to  send  a  case  to 
a  court  of  law  to  ascertain  the  principles  prevailing  there, 
unless  those  principles  have  equal  application  in  chancery. 
In  that  case,  as  we  have  assumed  in  this,  the  bill  was 
accepted  for  the  accommodation  of  the  drawer,  and  was 
indorsed  for  value  before  its  maturity.  In  that  case,  as 
in  this,  the  holder  was  ignorant  at  the  time  he  received 
the  bill  that  it  was  given  for  accommodation,  but  was 
afterwards  informed  of  that  fact,  before  the  act  was  done 
■which  the  acceptor  claimed  operated  as  his  discharge.  It 
will  at  once  be  perceived  how  very  similar  are  the  two 
cases  in  every  important  particular.  On  the  hearing  of 
that  case,  the  decisions  at  law  and  in  equity  were  con- 
sidered; and  all  the  judges  —  Tenterden,  C  J.,  and  Parks, 
Taunton,  and  Patterson,  J  J.  —  certified  to  the  Court  of 
Chancery  that  the  acceptor  was  liable  on  the  bill  the  same 
as  on  a  bill  for  value. 

Whether,  therefore,  we  apply  to  this  case  the  principles 
prevailing  in  equity  or  at  law,  the  result  is  the  same. 
The  plaintiffs  having  no  notice  at  the  time  they  received 
the  bills  that  they  were  given  for  accommodation  had  a 
right  to  treat  the  drawer  as  collaterally  liable  thereon,  and 
the  acceptor  as  the  principal  and  primary  debtor;  and  this 
right  of  the  holder  remains  unaffected  by  any  subsequent 
knowledge  which  he  may  have  that  they  were  for  the 
accommodation  of  the  drawer.  Under  such  circumstances, 
the  release  of  the  drawer  in  no  way  affects  the  liability  of 
the  defendant  as  acceptor.  This  view  of  the  case  renders 
it  unnecessary  to  pass  upon  other  questions  which  were 
urged  in  the  argument  of  the  case. 

The  result  is,  that  the  judgment  of  the  County  Court 
must  be  reversed,  and  the  case  remanded. 


356  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

MADISOX  SQUARE  BAXK  v.  PIERCE. 
Court  of  Appeals  of  New  York,  March,  1893.     137  N.  Y.  444. 

The  maker  of  a  negotiable  promissory  note,  executed  for  value,  cannot 
set  up  part  payment  by  an  iudorser  thereof  not  made  on  the  maker's 
behalf. 

Action  against  the  maker  of  a  negotiable  promissory  note. 
Payment  in  part,  by  an  inclorser,  set  up  in  defence  pro 
tanto.  Judgment  for  the  plaintiff,  for  the  whole  sum. 
The  facts  are  stated  in  the  opinion  of  the  court,  second 
paragraph. 

Finch,  J.,  for  the  court.  —  We  have  a  novel  and  interest- 
ing question  before  us  on  this  appeal,  although  its  apparent 
importance  will  lessen  as  we  pass  from  first  impressions 
to  some  slower  reflection.  It  arises  upon  facts  which  are 
very  brief  and  simple,  and  may  at  once  be  stated. 

The  defendant  Pierce  made  his  pi-omissory  note  payable 
to  his  own  order  and  indorsed  it  to  the  Bates  Co.,  Limited, 
which  indorsed  it  to  the  plaintiff  bank ;  the  latter  discount- 
ing and  paying  the  proceeds  over  to  the  immediate  indorser. 
Thereafter  the  Bates  Co.  became  insolvent  and  passed  into 
the  hands  of  a  receiver,  who  paid  to  the  bank,  upon  the 
liability  of  the  indorser,  seventy-three  and  one-quarter  per 
cent,  of  the  amount  secured  by  the  note.  Later  the  bank 
sued  Pierce  the  maker,  and  recovered  judgment  for  the  full 
amount  of  the  note  in  spite  of  the  proof  showing  the  pay- 
ment made  by  the  receiver,  and  in  disregard  of  the  claim 
asserted  by  the  defendant  that  he  should  only  be  held  liable 
for  the  balance  remaining  unpaid.  That  judgment  has  been 
affirmed  by  the  General  Term,  Judges  Daniels  and  Barrett 
each  writing  very  strong  and  valuable  opinions  in  support 
of  their  doctrine,  and  relying  upon  the  authority  of  Jones 
V.  Broadhurst,  9  C.  B.  173,  67  Eng.  Com.  L.  175,  which  fully 
warrants  their  conclusion.  The  question  does  not  seem  ever 
before  to  have  arisen  in  this  country,  and  we  are  left  at 


MADISON   SQUARE   BANK   v.  PIERCE.  357 

liberty  to  examine  the  English  rule  and  to  follow  it  or  not 
as  we  approve  or  disapprove  its  logic  and  its  consequences. 

We  are  not  to  regard  the  note  as  being  accommodation 
paper,  but  must  assume  its  transfer  for  value.  The  form  of 
the  transaction  is  equivalent  to  what  it  would  have  been  if 
the  Bates  Co.  had  been  named  as  payee,  and  loses  none  of 
its  force  by  the  intervention  of  the  maker  as  first  indorser. 
That  indorsement,  in  the  form  adopted,  was  needed  for  the 
regular  transfer  of  title,  but  does  not  change  or  affect  the 
nature  and  character  of  the  maker's  liabilit3\  He  remains 
the  ultimate  debtor,  the  person  who  ought  to  pay  the  debt, 
in  preference  to  and  in  exoneration  of  all  the  other  parties 
to  the  paper,  who  in  some  form  or  other  are  entitled  to  have 
final  recourse  to  him.  And  it  is  to  the  case  of  such  a  maker 
of  the  note  or  such  an  acceptor  of  the  bill  of  exchange  that 
the  English  rule  alone  applies,  and  it  is  explicitly  declared 
inapplicable  where  the  indorser  or  drawer  is  the  real  debtor, 
although  in  form  only  secondarily  liable. 

Pierce  therefore  was  the  ultimate  debtor,  and  the  party 
who  ought  to  pay  the  note,  both  in  discharge  of  the  obliga- 
tion to  the  holder  and  in  exoneration  of  the  indorser.  When 
the  bank  sued  on  the  note,  it  was  the  legal  holder  and  the 
legal  party  in  interest.  Upon  production  of  the  paper  and 
the  usual  proof,  judgment  against  the  maker  for  the  full 
amount  was  inevitable,  unless  some  defence  should  be  inter- 
posed. The  only  possible  one  for  Pierce  was  part  payment, 
and  he  was  compelled  to  assert,  and  his  counsel  are  com- 
pelled to  argue,  that  the  money  paid  by  the  indorser  to  the 
holder  inured  to  the  benefit  of  the  maker  as  a  payment  on 
his  debt.  But  that  doctrine  cannot  prevail  for  very  obvious 
reasons.  The  indorser's  payment  did  not  in  the  least  lessen 
or  satisfy  the  maker's  debt.  He  owed  it  all  exactly  as  be- 
fore. What  had  happened  possibly  changed  somewhat  the 
real  creditor,  but  left  the  whole  amount  due  and  unpaid. 
To  whom  he  should  pay  might  become  a  new  question,  but 
how  much  he  should  pay  in  discharge  of  the  note  was  not 
made  doubtful  in  any  degree.     What  the  receiver  advanced 


358  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

to  the  holder  is  familiarly  described  as  payment ;  but  it  was 
such  relatively  to  the  indorser's  liability  alone ;  while  rela- 
tively to  the  obligation  of  the  maker  it  was  an  equitable 
purchase  instead  of  a  payment.  That  view  of  it  was  taken 
in  a  very  early  case,  the  decision  of  which  depended  neces- 
sarily upon  it.  In  Callow  v.  Lawrence,  3  Maule  &  S.  95, 
it  appeared  that  one  Pywell  drew  a  bill  upon  Lawrence  to 
his  own  order,  which  Lawrence  accepted.  The  drawer  in- 
dorsed the  bill  to  Taylor,  who  discounted  it  and  thereafter 
indorsed  it  to  Barnett.  It  was  protested  for  non-payment. 
The  drawer  paid  Barnett  the  full  amount  and  took  the  bill, 
and  striking  off  the  indorsements  of  Taylor  and  Barnett, 
transferred  the  bill  to  Callow,  who  sued  the  acceptor  upon 
it.  The  latter  claimed  that  the  bill  was  paid  and  extin- 
guished, which  the  court  denied,  saying  that  the  drawer 
'  became  the  purchaser  of  the  bill '  when  he  paid  and  took 
it  up  out  of  Barnett's  hands ;  that  it  was  not  paid  by  the 
drawer  animo  solvendi,  —  in  order  to  extinguish  it,  but  only 
to  redeem  himself  from  the  situation  in  which  he  stood. 
That  must  always  be  true  of  payment  by  indorser  to  holder, 
where  the  maker  is  the  ultimate  debtor.  To  the  extent  of 
the  money  paid  the  indorser  becomes  equitably  entitled  to 
be  substituted  to  the  rights  and  remedies  of  the  holder,  and 
becomes  pro  tanto  the  beneficial  owner  of  the  debt ;  so  that 
the  maker's  obligation  to  pay  the  note  in  full,  at  first  due 
to  the  holder  solely  in  his  own  right,  becomes,  after  the 
part  payment  by  the  indorser,  still  wholly  due  to  the  holder, 
but  partly  in  his  own  right  and  partly  as  trustee  for  the  in- 
dorser. A  court  of  law  cannot  split  the  note  into  parts,  and 
must  act  upon  the  legal  interest  and  ownership. 

In  the  present  case  there  was  no  privity  between  maker 
and  indorser  as  it  respects  the  action  of  the  latter.  He 
paid,  not  as  the  agent  of  the  maker,  not  at  his  request,  not 
for  his  benefit,  and  vmder  no  duty  to  relieve  him,  but  in- 
dependently, upon  his  own  obligation,  to  lessen  his  own 
responsibility,  and  not  at  all  to  discharge  the  ultimate  debt 
which  it  was  the  maker's  duty  to  pay.     It  seems  very  clear 


MADISON  SQUARE  BANK  v.  PIERCE.  359 

therefore  that  the  maker  cannot  utilize  for  his  own  benefit 
a  payment  which,  as  to  him,  is  not  a  payment  upon  the 
debt.  It  becomes,  as  I  have  said,  merely  a  question  to 
whom  he  shall  pay  and  who  may  sue  for  and  collect  the 
whole  unpaid  sum.  In  that  question  the  maker  has  no  con- 
cern beyond  the  inquiry  whether  he  may  become  liable  to 
different  persons  for  the  same  debt  and  encounter  the  dan- 
ger of  paying  it  twice.  I  can  discover  no  such  peril.  The 
judgment  in  favor  of  the  holder  is  a  bar  to  any  other  suit 
on  the  same  note,  and  payment  to  the  holder  discharges 
the  note  utterly.  Ordinarily  the  indorser  cannot  recover 
except  upon  the  note,  and  as  holder,  and  in  accordance  with 
the  law  merchant.  If  he  ever  has  any  other  right  of  action 
against  the  maker,  it  is  either  in  equity  or  by  force  of  some 
facts  beyond  the  bare  relation  established  by  the  paper. 
And  where  the  note  is  merged  in  the  holder's  judgment,  or 
paid  in  full  to  him  by  the  maker,  the  indorser's  only  right 
is  through  the  judgment  or  against  the  proceeds  if  he  has 
made  a  partial  payment  to  the  holder.  That  does  the  in- 
dorser no  wrong.  If  he  is  not  content  that  the  holder  shall 
collect  to  some  extent  as  his  trustee,  he  may  prevent  it  by 
payment  in  full  to  the  holder  and  so  entitle  himself  to  the 
possession  of  the  note  on  which  to  sue,  or,  if  judgment  has 
been  obtained,  to  be  subrogated  to  all  of  the  rights  of  the 
plaintiff  therein. 

I  think  this  result  is  clearly  indicated  by  our  own  de- 
cisions. In  Mechanics'  Bank  v.  Hazard,  13  Johns.  353,  the 
maker  of  the  note  had  been  arrested  in  an  action  upon  it, 
and  his  bail  sought  to  relieve  themselves  by  force  of  a  pay- 
ment made  by  the  indorser  to  the  holder,  but  such  effect 
was  denied  to  it ;  the  court  saying  that  it  was  not  a  pay- 
ment by  or  on  behalf  of  the  maker,  or  of  which  he  or  his 
bail  could  avail  themselves.  And  in  Guernsey  v.  Burns,  25 
Wend.  411,  where  the  suit  was  by  the  holder,  representing 
the  legal  title  and  interest,  it  was  said  to  be  no  defence  to 
the  maker,  and  no  concern  of  his,  that  some  property  in  the 
note  was  in  another. 


360  CASES  ON  BILLS,  NOTES,  AND   CHEQUES. 

It  thus  becomes  apparent  that  there  is  no  very  great  im- 
portance in  the  question  which  method  of  securing  payment 
from  the  maker  is  adopted,  since  the  same  result  follows 
from  each,  and  that  it  narrows  down  to  the  inquiry  whether 
as  matter  of  correct  doctrine  and  of  convenience  in  practice 
the  holder  may  recover  the  whole  debt  against  maker  or 
acceptor  for  himself  and  as  trustee  for  the  indorser  to  the 
extent  of  his  acquired  interest ;  or  whether  he  shall  take 
judgment  only  for  the  balance,  leaving  the  indorser  to  sue 
in  some  way  and  on  some  theory,  which  apparently  could 
not  be  upon  the  note  because  already  merged  in  the  judg- 
ment, but  might  be  for  money  paid  for  the  use  of  the  maker, 
since  he  gets  the  benefit  of  it  in  the  reduction  of  the  judg- 
ment, as  was  held  in  Pownal  v.  Ferrand,  6  Barn.  &  C.  439, 
where  the  holder  deducted  the  indorser's  payment  from  the 
levy  against  the  maker.  The  former  seems  to  me  to  be  the 
logical  and  convenient  method,  and  so  I  think  we  should 
follow  the  English  doctrine. 

I  have  not  underrated  the  assault  made  upon  it  by  the 
appellant.  He  asserts  that  Jones  v.  Broadhurst  is  contrary 
to  the  earlier  cases,  and  has  been  criticised  and  shaken  by 
the  later  ones.  I  have  examined  them  all,  with  some  won- 
der at  the  amount  of  learning  and  ingenuity  expended  upon 
the  subject.  Pierson  v.  Dunlop,  Cowp.  571 ;  Walwyn  v. 
St.  Quentin,  1  Bos.  &  P.  652 ;  Bacon  v.  Searles,  1  H.  Bl.  88 ; 
Hemming  v.  Brook,  Car.  &  M.  57;  Randall  v.  Moon,  12 
C.  B.  261 ;  Cook  v.  Lister,  13  C.  B.  n.  s.  543 ;  Solomon  v. 
Davis,  1  Cahabe  &  Ellis,  83 ;  Thornton  v.  Maynard,  L.  R. 
10  C.  P.  695.  The  prior  cases  were  very  fully  and  carefully 
reviewed  by  Baron  Cresswell,^  in  the  opinion  rendered  in 
Jones  V.  Broadhurst ;  and  of  the  subsequent  cases  I 
deem  it  only  necessary  to  say  that  along  with  some  criti- 
cism and  doubt,  the  doctrine  has  remained  substantially 
unshaken,  and  the  case  last  cited  was  declared  by  Lord 
Coleridge  to  be  the  accepted  law. 

It  must  not  be  forgotten,  however,  and  I  may  prudently 

1  A  slip  for  Cresswell,  J. 


SWOPE  V.  ROSS.  361 

repeat,  that  the  doctrine  has  no  application  to  accommoda- 
tion paper,  and  rests  wholly  upon  the  actual  and  ultimate 
indebtedness  of  maker  or  acceptor  as  the  party  who  ought 
to  pay.  In  such  a  case  as  that,  which  correctly  describes 
the  one  now  before  us,  and  where  no  disturbing  facts  affect 
the  relations  of  the  parties  as  fixed  by  the  paper  itself,  I 
think  the  holder  may  sue  and  recover  the  full  amount, 
receiving  so  much  of  the  proceeds  as  represents  a  part  pay- 
ment by  the  iudorser  as  trustee  for  him. 

It  follows  that   the  judgment  should  be  affirmed  with 
costs. 

All  concur,  except  Maynard,  J.  dissenting. 

Judgment  affirmed. 


SWOPE  V.    EOSS. 
Supreme  Court  of  Pennsylvania,  1861.     40  Penn.  St.  186. 

The  drawee  of  a  bill  not  accepted  by  him  may  discount  the  same  before 
maturity  and  thus  become  holder  of  the  paper.  Such  proceeding  is  not  a 
payment. 

Assumpsit  upon  the  following  case  stated : 
Ross  Forward  gave  to  Swope  &  Karns  the  following 
instrument  of  writing:  — 

'Somerset,  Pa.,  August  18,  1859. 
'  George  Eoss  &  Co.,  bankers,  pay  to  Swope  &  Karns 
or  order,  ninety  days  from  date,  six  hundred  and  sixteen 
dollars. 

'  Eoss  Forward.  ' 

On  or  about  the  1st  of  September  thereafter,  Swope, 
one  of  the  firm  of  Swope  &  Karns,  delivered  this  paper 
(indorsed  Swope  &  Karns)  to  the  plaintiffs'  bank,  had  the 
same  discounted,  and  received  the  money  thereon,  less  the 
discount,  $16.40.  At  the  time  this  check  was  given,  and 
when  it  was  discounted  at  the  bank,  Eoss   Forward  was 


362  CASES  ON  BILLS,  KOTES,  AKD  CHEQUES. 

one  of  the  firm  of  George  Ross  &  Co.,  but  went  out  on  the 
19th  of  September,  1859.  When  the  day  of  payment 
named  in  the  check  came  round,  Forward  had  no  funds  in 
the  bank,  and  the  paper  was  regularly  protested  for  non- 
payment on  the  19th  of  November,  1859. 

If  the  court  be  of  the  opinion  that,  on  the  abovfe  state  of 
facts,  the  plaintiffs  are  entitled  to  recover,  the  judgment 
to  be  entered  in  favor  of  plaintiffs  for  $616,  with  interest 
from  Nov.  9,  3859;  otherwise  judgment  for  defendant  with 
costs.     Judgment  for  plaintiffs.     Writ  of  error. 

Strong,  J.,  for  the  court.  — The  question  presented  by 
the  case  stated  is  quite  novel,  and  we  have  not  been  able 
to  find  that  it   has  been   adjudicated.      Undoubtedly  the 
acceptor  of  a  bill  of  exchange  is  the  principal  debtor,  and 
the  drawer  and  indorsers  are  but  sureties.     Of  course  the 
acceptor,  even  after  payment,  cannot  sue  either  the  drawer 
or  indorser  of  the  bill  unless  his  acceptance  was  supra 
protest.     His  payment  of  the  bill  extinguishes  it,  but  the 
case  stated  finds  that  the  plaintiffs  discounted  the  bill  for 
the  payees  before  it  became  payable,  not  that  they  accepted 
it  or  paid  it.     Discounting  a  bill,  though  it  be  done  by  the 
drawee,  is  neither  acceptance  nor  payment.     Acceptance  is 
an  engagement  to  pay  the  bill  according  to  its  tenor  and 
effect  when  it  becomes  due,    not  before.     A  bill  is  paid 
only  when  there  is  an  intention  to  discharge  and  satisfy  it. 
In  Burbridge  v.  Manners,  3  Camp.  194,  Lord  Ellenborough 
said  '  that  even  payment  of  a  bill  before  it  became  due  does 
not  extinguish   it  any  more  than  if   it  were   merely  dis- 
counted,' and  added  that  '  payment  means  payment  in  due 
course  and  not  by  anticipation.'     His  lordship  evidently 
thought  that  discounting  a  bill  by  a  drawee  is  neither  pay- 
ment nor  extinguishment.     In  Attenborough  v.  McKenzie, 
in  the  English  Court  of  Exchequer,  36  Eng.  L.  &  Eq.  562, 
it  was  held  that,  if  the  acceptor  of  a  bill  discounts  it,  he 
may  reissue  it  so  as  to  charge  the  drawer;  that  nothing 
will   discharge   the  drawer  but   payment;    i.  e.,  payment 


SWOPE  i;.  ROSS.  363 

when  due,  or  payment  for  the  purpose  of  discharging  and 
satisfying  the  bill.  Therefore,  if  the  acceptor  discounts 
the  bill  for  the  drawer  and  then  indorses  it  away,  the 
drawer  will  be  liable  upon  it  to  the  holder,  and  the  trans- 
fer by  the  drawer  to  the  acceptor  will  operate  as  an  in- 
dorsement, although  at  the  time  the  drawer  does  not 
intend  to  transfer  by  way  of  indorsement,  being  under  the 
impression  that  the  bill  is  discharged  by  coming  into  the 
hands  of  the  acceptor.  Nor  will  the  payment  of  the  amount 
less  the  discount  be  deemed  a  payment  of  the  bill  by  the 
acceptor.  In  that  case  the  holder  of  the  bill  took  it  by 
indorsement  after  it  was  due,  from  the  transferee  of  the 
acceptor.  The  ruling  goes  to  the  length  that  even  the 
accepting  drawee  of  a  bill  may  take  it  as  an  indorsee,  and 
as  such  may  issue  it.  It  also  decides  that  he  does  take  it 
as  an  indorsee  when  he  discounts  it.  Can  then  the  drawee 
of  a  bill,  payable  on  time,  who  has  discounted  it,  main- 
tain an  action  on  it  against  the  drawer  or  indorser  if  it  be 
protested  for  non-payment  and  notice  be  given?  He  is  not 
a  party  to  the  bill  until  he  has  accepted  it.  Until  then, 
he  has  not  assumed  the  position  of  principal  debtor,  nor 
undertaken  any  obligation  in  regard  to  it.  His  discount- 
ing has  neither  paid  nor  extinguished  it,  and  it  is  not  a 
promise  to  pay  according  to  its  tenor  and  effect.  Is  he 
precluded  from  becoming  an  indorsee  by  the  fact  that  the 
bill  was  directed  to  him?  It  seems  well  settled  that  the 
drawee  of  a  bill  may  accept  or  pay  it,  supra  protest,  for 
honor  of  the  drawer  or  indorser,  and  if  he  takes  it  up  he 
stands  in  the  position  of  an  indorsee  paying  full  value  for 
it,  has  the  same  remedies  to  which  an  indorsee  would  be 
entitled  against  all  prior  parties,  and  can  of  course  sue  the 
drawer  or  indorser.  Chitty,  Bills,  375.  In  such  cases  the 
fact  that  the  bill  was  drawn  upon  him  does  not  incapacitate 
him  from  acquiring  the  rights  of  an  indorsee.  No  reason 
is  apparent  for  a  different  rule  where  the  drawee  becomes 
the  holder  by  discounting  the  bill  before  its  dishonor. 
Uncertain  whether   the   drawer  will   put  funds   into  his 


364  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

hands  to  meet  the  bill  at  maturity,  he  may  well  re f us 3  to 
accept,  and  yet  may  discount  it  on  the  credit  of  both  the 
drawer  and  indorser.  If  he  does  not  accept,  he  is  as  much 
a  stranger  to  it  as  any  other  person  discounting  it  for  the 
drawer  or  indorser;  is  but  purchasing  the  contract,  and 
the  contract  thus  purchased  is  that  the  drawee  will  pay 
the  bill  on  presentment,  when  it  shall  fall  due,  or,  in  case 
of  his  failing  to  do  so,  that  the  parties  whose  names  are 
already  upon  it  will  pay,  if  due  notice  of  its  dishonor  be 
given  to  them.  The  promise  is  made  by  the  parties  to  the 
bill.     The  purchaser  enters  into  no  engagement. 

These  views  accord  with  the  doctrine  laid  down  in  Desha, 
Sheppard  &  Co.  v.  Stewart,  6  Ala.  852,  a  case  which  more 
closely  resembles  the  present  than  any  we  have  been  able 
to  find.  In  it  the  Supreme  Court  of  that  State  ruled  that 
the  drawees  of  a  bill  may  sue  the  drawer  or  indorsers  after 
it  has  been  dishonored,  even  though  they  obtained  the  bill 
before  its  dishonor;  and  that  until  acceptance  they  are 
strangers  to  the  bill,  and  may  acquire  rights  to  it,  and 
stand- in  the  same  condition  as  any  other  holder.  It  was 
said  that  there  is  no  legal  presumption  if  the  drawer  comes 
into  possession  of  the  bill  previous  to  its  dishonor,  that  he 
takes  it  with  the  obligation  to  accept. 

Such  being  in  our  opinion  the  law,  it  was  not  error  that 
the  Court  of  Common  Pleas  gave  judgment  for  the  plaintiff 
upon  the  case  stated.  The  fact  is  not  distinctly  found 
that  notice  of  dishonor  of  the  bill  was  duly  given  to  the 
defendants,  but  it  was  conceded  on  the  argument  that  such 
was  the  fact,  and  that  such  is  the  meaning  of  the  case 
stated.     The  judgment  is 

Affi7'med. 


WHEELER  V.  GUILD.  365 

WHEELER  V.    GUILD. 

Supreme  Court  of  Massachusetts,  October,  1838.     20  Pick.  545. 

Payment  by  the  maker  before  maturity,  to  the  holder  of  a  negotiable 
note  not  entitled  to  receive  payment  thereof,  if  not  followed  by  surrender 
of  the  note,  will  not  protect  the  maker. 

The  case  is  stated  in  the  opinion  of  the  court. 

Shaw,  C.  J.,  for  the  court. — The  facts  of  this  case 
present  a  very  important  question  for  the  consideration  of 
the  court.  Whatever  affects  the  negotiability  and  the  free 
currency  of  promissory  notes  and  bills  of  exchange  is  of 
the  utmost  importance  to  a  mercantile  community,  the 
business  of  which  is  to  a  great  extent  transacted  through 
the  medium  of  these  instruments. 

The  facts  which  may  be  deemed  material  are  these :  The 
plaintiff  became  the  holder  of  the  note  in  question  by 
regular  indorsement  for  valuable  consideration,  soon  after 
it  was  made,  being  a  note  dated  September  1,  1833,  payable 
in  three  years,  with  interest,  and  the  last  indorsement 
being  in  blank.  Within  a  year  from  the  date  of  the  note, 
to  wit,  in  March,  1834,  the  plaintiff,  John  Wheeler,  as 
surety,  joined  with  Daniel  G.  Wheeler  in  three  promissory 
notes,  one  to  Brigham  &  Goodrich,  attorneys  and  part- 
ners, in  Worcester,  one  to  Tappan  &  Co.,  and  one  to 
Stewart  &  Co.,'  of  New  York,  for  both  of  which  parties 
Brigham  &  Goodrich  were  agents  and  attorneys.  On 
that  occasion,  the  plaintiff,  John  Wheeler,  delivered  to 
Brigham  &  Goodrich,  as  collateral  security  to  his  three 
joint  and  several  promises,  the  note  in  question,  indorsed 
in  blank,  and  took  their  receipt,  specifying  that  it  was  so 
received,  and  to  be  by  them  held,  as  collateral  security  for 
the  payment  of  those  notes.  In  September,  1835,  these 
three  notes  had  been  fully  paid.  Though  Brigham  and 
Goodrich  were    in   partnership   as    attorneys-at-law,    yet 


366  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

Brigham  was  engaged  in  much  other  business,  and  had 
many  separate  negotiations,  and  the  business  in  question 
had  been  done  in  the  partnership  name,  but  in  fact  by 
Goodricli.  In  December,  1835,  the  pkiintiff  applied  to 
Goodrich  for  the  note,  who  then  produced  and  exhibited  it 
from  a  file  of  private  papers,  where  it  had  been  kept  by 
him,  and  he  would  then  have  given  it  up  to  the  plaintiff, 
but  the  plaintiff  had  not  his  receipt  with  him  to  exchange 
for  it.  In  the  mean  time,  before  this  application  of  the 
plaintiff  to  Goodrich,  viz.,  on  the  28th  of  November,  1835, 
Brigham  had  received  of  Stafford,  one  of  the  firm  of  A.  H. 
Guild  &  Co.,  and  one  of  the  defendants,  $500  to  pay  the 
note  in  question,  describing  it  as  a  note  payable  in  Sep- 
tember, 1836,  and  gave  him  a  receipt,  in  his  separate 
name,  signed  D.  T.  Brigham,  stating  that  the  $500  had 
been  received  in  full  payment  of  the  note,  and  the  note  to 
be  delivered  up  to  Stafford.  Soon  after  the  application  of 
the  plaintiff  to  Goodrich  above  stated,  viz.,  about  the  21th 
of  December,  Stafford,  one  of  the  defendants,  producing 
Brigham's  receipt,  applied  to  Goodrich  for  the  note,  who 
declined  giving  it,  on  the  ground  that  Brigham  had  no 
right  to  receive  pay  for  and  discharge  the  note;  and  by 
mutual  consent  it  was  placed  in  the  custody  of  a  gentle- 
man, for  the  use  of  the  party  having  the  better  title  to  it, 
by  whom  it  was  produced  in  this  court  on  the  trial. 

Some  inferences  are  to  be  drawn  from  this  evidence, 
which  may  have  a  bearing  on  the  case;  but  we  think  they 
are  plainly  deducible  from  the  circumstances  stated,  and 
they  are  these :  That  Goodrich  did  not  assent  to  the  pay- 
ment received  by  Brigham,  and  did  not  in  fact  know  of  it 
till  after  he  had  been  applied  to  by  the  plaintiff  for  the 
note;  that  Goodrich  had  the  actual  possession  and  custody 
of  the  note;  and  that,  at  the  time  that  Brigham  received 
the  money  and  gave  the  receipt,  he  not  only  did  not  pro- 
duce or  exhibit  the  note,  but  that  he  had  not  the  actual 
custody  of  it,  nor  was  it  so  amongst  the  partnership  papers 
as  that  it  was  in  the  actual  joint  custody  of  the  parties  as 


WHEELER   V.  GUILD.  367 

partners.  If  lie  had  it  in  his  possession,  or  had  regular 
access  to  it  in  the  ordinary  way  of  business,  there  is  no 
reason  why  he  did  not  deliver  it  up  to  Stafford,  instead  of 
giving  him  a  receipt,  and  a  promise  to  deliver  it. 

The  law  in  regard  to  bills  of  exchange  and  promissory 
notes  is  so  framed  as  to  give  confidence  and  security  to 
those  who  receive  them  for  valuable  consideration,  in  the 
ordinary  course  of  business,  when  payable  to  bearer  or 
indorsed  in  blank,  so  as  to  be  transferable  by  delivery ;  and 
in  general  a  party  taking  such  a  bill  under  such  circumstances 
has  only  to  look  to  the  credit  of  the  parties  to  it,  and  the 
regularity  and  genuineness  of  the  signatures  and  indorse- 
ments. So  that  if  such  a  bill  or  note  be  made  without 
consideration,  or  be  lost  or  stolen,  and  afterwards  be  nego- 
tiated to  one  having  no  knowledge  of  these  facts,  for  a 
valuable  consideration  and  in  the  usual  course  of  business, 
his  title  is  good,  and  he  shall  be  entitled  to  receive  the 
amount.  Miller  v.  Race,  1  Burr.  452;  Peacock  v.  Khodes, 
2  Doug.  633;  Grant  v.  Vaughan,  3  Burr.  1516.  The  credit 
which  the  law  thus  attributes  to  notes  and  bills  of  exchange 
which  are  transferable  by  delivery  arises  mainly  from  the 
confidence  inspired  by  the  actual  custody  and  possession, 
and  the  actual  delivery  of  the  security  upon  such  negotia- 
tion. To  so  great  an  extent  is  this  principle  carried,  that 
in  regard  to  bank-notes,  and  in  most  respects  in  regard  to 
all  other  bills  and  notes  transferable  by  delivery,  the  title 
and  the  possession  are  considered  to  be  inseparable.  And 
it  will  be  presumed  that  the  party  thus  in  possession  of  a 
bill  holds  it  for  value,  until  the  contrary  appears ;  and  the 
burden  of  proof  is  on  the  party  impeaching  his  title. 
Collins  V.  Martin,  1  Bos.  &  Pul.  648. 

But  these  rules  are  adopted  with  this  limitation,  that 
the  party  thus  taking  the  note  or  bill  does  it  in  the  ordi- 
nary course  of  trade,  when  not  overdue  or  otherwise 
dishonored  by  anything  apparent  upon  the  face  of  it,  and 
without  notice  that  it  had  been  lost  or  stolen,  or  that  the 
holder  had  obtained  it  wrongfully,  or  had  no  just  right  to 


368  CASES   ON  BILLS,  NOTES,  AND   CHEQUES. 

receive  it  in  the  way  of  business.  Paterson  v.  Hardacre, 
4  Taunt.  114.  If  one  takes  a  note  or  bill  with  actual 
notice  that  it  has  been  lost  by  the  owner,  he  cannot  hold  it 
against  the  true  owner.     Lovell  v.  Martin,  4  Taunt.  799. 

It  has  been  argued  that  where  a  party  has  a  legal  title  by 
indorsement  and  delivery,  and  the  actual  possession  of 
the  bill  or  note,  although  he  holds  without  any  just  right 
to  negotiate  or  collect  it,  still,  as  he  has  a  legal  title,  a 
transfer  from  him  will  vest  a  legal  title  in  another,  and 
authorize  such  other  to  take  for  his  own  use.  But  this  con- 
sequence, we  think,  does  not  follow.  The  true  ground  is 
expressed  by  Eyre,  C.  J.,  in  the  case  above  cited,  Collins 
V.  Martin.  He  says :  '  For  the  purpose  of  rendering  bills 
of  exchange  negotiable,  the  right  of  property  passes  with 
the  bills  themselves.  The  property  and  the  possession  are 
inseparable.  This  was  necessary  to  make  them  negotiable, 
and  in  this  respect  they  differ  essentially  from  goods.'  In 
another  part  of  his  judgment,  in  assigning  the  reason  why 
a  person  thus  having  a  legal  title  may  not  enforce  the  col- 
lection of  the  bill,  whether  he  has  given  value  for  it  or 
not,  he  says :  '  If  it  can  be  proved  that  the  holder  gave  no 
value  for  the  bill,  then  he  is  in  privity  with  the  first 
holder,  and  will  be  affected  by  everything  that  affects  the 
first.  This  all  proceeds  upon  an  argumentum  ad  hominem. 
It  is  saying,  you  have  the  title,  but  you  shall  not  be  heard 
in  a  court  of  justice  to  enforce  it  against  good  faith  and 
conscience.'  The  same  reasoning  applies  to  other  cases, 
where  a  party  has  the  custody  of  a  bill,  without  any  just 
right  or  lawful  authority  to  collect  or  negotiate  it,  as  where 
it  has  been  lost  or  stolen,  or  embezzled  from  the  true 
owner,  or  intrusted  to  an  agent,  for  a  special  purpose 
only;  if  these  facts  are  known  to  the  party  receiving  it, 
he  is  in  privity  with  the  party  from  whom  he  receives  it, 
and  cannot  be  heard  in  a  court  of  justice,  though  having  a 
legal  title  to  enforce  an  inequitable  and  unjust  demand. 
Such  a  case  is  not  within  the  reason  of  the  rule,  which  is 
designed  only  to   protect   bills  and   notes  when  taken  in 


WHEELER   V.  GUILD.  369 

good  faith,  in  the  course  of  business.  If  a  note  is  paid, 
not  in  the  usual  course  of  business,  or  to  a  person  having 
the  custody,  but  not  authorized  to  receive  payment,  and 
that  known  to  the  party  paying,  though  the  note  be  given 
up,  it  is  no  discharge  against  the  true  owner.  Kingman 
V.  Pierce,  17  Mass.  247. 

So  payment  of  a  bill  or  check,  before  it  is  due,  will  not 
be  a  discharge  unless  made  to  the  real  proprietor  of  it; 
and  therefore  where  a  banker,  contrary  to  usage,  paid  a 
check  the  day  before  it  bore  date,  which  had  been  lost  by 
the  payee,  it  was  held  that  he  was  liable  to  repay  the 
amount  to  the  person  losing  it.  Da  Silva  v.  Fuller,  Sel. 
Cas.  238,  cited  in  Chitty,  Bills,  6th  Eng.  ed.  148.  In  this 
case,  although  the  holder  had  the  legal  title  arising  from 
the  possession  of  the  check,  yet  he  was  not  bona  fide  the 
holder  with  authority  to  collect,  and,  as  the  banker  paid  it 
out  of  the  usual  course  of  business,  he  paid  it  at  the  risk 
of  being  obliged  to  pay  it  again,  if  the  party  presenting  it 
had  not  just  right  to  receive  it. 

Most  of  the  same  principles  and  reasons  apply  alike  to 
transfers  and  to  payments.  We  think  the  rules  deducible 
from  the  cases  are  these :  Where  a  party  takes  a  bill  trans- 
ferable by  delivery,  not  overdue  nor  otherwise  apparently 
dishonored,  for  valuable  consideration,  in  the  usual  course 
of  business,  and  without  notice,  actual  or  constructive, 
that  the  holder  came  by  it  unlawfully  or  without  title,  and 
has  no  just  right  to  collect  and  receive  it,  the  party  taking 
it  stall  hold  it  as  a  valid  security,  notwithstanding  that 
it  has  been  lost  by  the  true  owner,  or  stolen  from  him,  or 
taken  by  the  holder  as  a  mere  agent  to  keep,  or  for  other 
special  purpose,  without  any  authority  to  collect  or  transfer 
it;  otherwise  he  shall  not  be  deemed  to  have  a  good  title 
to  hold  and  enforce  payment  of  it  or  to  withhold  the  bill 
itself  or  the  proceeds  of  it  from  the  party  justly  entitled. 
Bleaden  v.  Charles,  7  Bing.  246.  The  same  rule  applies 
to  payments:  if  a  bill  be  paid  at  maturity,  in  full,  by  the 
acceptor,  or  other  party  liable,  to  a  person  having  a  legal 

24 


370  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

title  in  himself  by  indorsement,  and  having  the  custody 
and  possession  of  the  bill  ready  to  surrender,  and  the  party 
paying  has  no  notice  of  any  defect  of  title  or  authority  to 
receive,  the  payment  will  be  good.  But  in  both  cases 
faith  is  given  to  the  holder  mainly  on  the  ground  of  his 
possession  of  the  bill,  ready  to  be  surrendered  or  delivered, 
and  the  actual  surrender  and  delivery  of  it  upon  the  pay- 
ment or  transfer.  If,  therefore,  upon  such  payment,  the 
holder  has  not  the  actual  possession  of  the  bill  ready  to  be 
delivered,  and  does  not  in  fact  surrender  it,  but  gives  a 
receipt  or  other  evidence  of  the  payment;  and  if  it  turns 
out  that  the  party  thus  receiving  had  not  a  good  right  and 
lawful  authority  to  receive  and  collect  the  money,  but  that 
another  person  had  such  right,  the  payment  will  not  dis- 
charge the  party  paying,  but  will  be  a  payment  in  his  own 
Avrong;  he  must  pay  the  bill  again  to  the  right  owner,  and 
must  seek  his  redress  against  the  party  receiving  his 
money,  on  the  pretence  that  he  had  a  right  to  receive  it  as 
the  holder  of  the  bill,  when  in  fact  he  had  no  such  right. 

Applying  these  principles  to  the  present  case,  the  court 
are  of  opinion  that  the  payment  made  by  Stafford  to 
Brigham,  under  the  circumstances,  did  not  operate  as  a 
payment  and  discharge  of  this  note,  and  that  the  plaintiff 
is  entitled  to  recover. 

Tlie  plaintiff  was  the  holder  of  this  note  by  indorsement, 
before  it  was  pledged  to  Brigham  &  Goodrich,  and  had 
the  complete  legal  and  equitable  title  to  it,  and  the  whole 
beneficial  interest  in  it.  Being  transferable  by  delivery, 
when  transferred  to  Brigham  &  Goodrich,  they  took  the 
legal  title,  with  a  right  to  collect  it,  and  apply  the  pro- 
ceeds to  the  payment  of  the  notes,  for  the  security  of 
which  it  was  pledged,  if  they  should  not  be  otherwise 
paid.  But  when  those  notes  were  paid,  all  right  of  Brig- 
ham &  Goodrich  to  transfer  or  collect  it  ceased,  and  they 
had  the  mere  naked  possession  of  it  for  the  plaintiff,  to  be 
surrendered  on  demand.  Now  whatever  might  have  been 
the  effect  of  an  actual  surrender  and  delivery  of  this  note 


WHEELER   V.  GUILD.  371 

to  one  of  the  promisors,  on  receiving  payment,  it  is  very 
clear  that,  according  to  all  the  rules  applicable  to  this  sub- 
ject, without  surrendering  and  delivering  up  the  note,  the 
payment  must  be  considered  as  made  at  the  risk  of  the 
party  paying;  and,  as  the  party  receiving  m  fact  had  no 
right  to  receive  payment,  such  payment  and  receipt  did 
not  discharge  the  note,  as  against  the  true  owner.  It  is 
not  necessary  to  consider  whether  Brigham  was  acting  in 
his  partnership  capacity  or  not;  because,  after  the  purpose 
was  accomplished  for  which  the  note  was  pledged  to  the 
partners,  they  had  no  just  right  or  lawful  authority  to 
transfer  or  collect  the  note  as  against  the  plaintiff.  If 
they  had  jointly  transferred  it  in  the  due  course  of  busi- 
ness, although  their  transferee  without  notice  might  have 
held  it,  it  would  be  in  virtue  of  the  law  which  protects 
such  transfers  to  a  party  without  notice,  in  order  to  give 
effect  to  the  currency  of  bills  and  notes,  and  not  because 
Brigham  &  Goodrich  had  any  right  or  lawful  authority. 
If  therefore  they  had  given  a  transfer  in  writing  with  a 
promise  to  deliver  the  note,  not  delivering  or  producing  it, 
no  title  would  have  passed  as  against  the  plaintiff,  because 
such  transfer  without  delivery  would  not  be  within  the 
reason  or  principle  of  the  rule. 

But  we  think  the  other  point  is  equally  decisive.  Brig- 
ham not  only  did  not  produce  or  exhibit  the  note,  but  he 
had  not  the  actual  custody  or  possession  of  it.  He  did 
not  profess  to  act  for  the  partnership,  but  signed  the 
receipt  in  his  own  name.  Had  Brigham  and  Goodrich,  as 
partners,  been  the  true  holders  of  the  note,  or  if  they  had 
had  a  joint  authority  to  collect  it,  it  may  well  be  admitted 
that  the  act  of  one  or  the  receipt  of  one  would  bind  both. 
But  all  the  right  and  authority  which  they  ever  had  over 
the  note,  except  to  give  it  back  to  the  plaintiff,  agreeably 
to  their  contract,  had  ceased.  A  receipt  of  one  therefore 
in  his  own  name,  and  not  purporting  to  be  for  the  use  of 
both,  was  not  within  the  scope  of  the  partnership  author- 
ity, and  did  not  bind  his  partner.     The  defendant  Stafford 


372  CASES  ON  BILLS,  NOTES,  AND  CHEQUES, 

gave  credit  to  Brigham  only.  For  though  his  receipt  pur- 
ports to  be  not  merely  executory,  but  a  present  discharge 
of  the  note,  yet  as  he  had  no  authority  to  discharge  it, 
either  by  himself,  or  for  himself  and  partner,  and  as  he 
had  not  the  note  to  surrender  and  give  up,  the  legal  effect 
and  operation  of  his  receipt  was  an  executory  undertaking 
that  he  would  procure  a  discharge  of  the  note  and  sur- 
render it.  The  consequence  is,  that  Stafford  paid  his 
money  to  the  wrong  person,  and  must  look  to  him  for  an 
indemnity. 

Besides,  the  note  was  not  paid  in  the  due  course  of 
business.  It  was  paid  many  months  before  it  was  due;  the 
full  sum  was  not  paid,  there  being  more  than  two  years' 
interest  due  on  the  notes,  which  was  wholly  relinquished; 
no  notice  was  given  to  Goodrich,  the  partner  who  trans- 
acted the  business  of  taking  these  notes,  and  giving  the 
receipt  for  them,  and  who  had  the  actual  custody  of  this 
note,  all  of  which  would  be  strong  evidence  to  go  to  a  jury, 
to  establish  the  fact  of  constructive  notice  to  Stafford  that 
Brigham  had  no  right,  either  in  his  own  name  or  as  a 
partner  with  Goodrich,  to  receive  payment  of,  or  to  dis- 
charge this  note.  But  the  other  grounds  are  sufficient, 
without  relying  upon  these  circumstances. 

The  grounds  upon  which  the  court  place  their  judgment 
are  these :  The  plaintiff  had  once  a  good  title  to  the  note. 
It  was  delivered  to  Brigham  &  Goodrich,  for  a  special  pur- 
pose, which  was  accomplished.  After  that,  Brigham  & 
Goodrich  had  a  mere  naked  custody  of  the  note  for  the 
plaintiff  and  had  no  right  or  lawful  authority  either  to 
negotiate  or  collect  it;  a  fortiori,  Brigham  alone  had  no 
such  authority.  The  defendant,  Stafford,  was  not  law- 
fully called  upon  to  pay  Brigham,  as  having  the  possession 
and  custody  with  a  prima  facie  title,  because  he  had  no 
such  custody  or  possession,  and  the  note  was  not  due. 
Stafford  was  not  deceived  into  taking  the  note  by  the  pro- 
duction and  delivery  of  it,  because  it  was  not  delivered  or 
produced;    if   he  paid  it   therefore  to  Brigham,    without 


AYMAR  V.  SHELDON.  373 

having  [taken]  up  his  note,  he  did  it  on  the  faith  that 
Brigham  had  good  right  to  receive  payment  and  discharge 
it,  and  of  course  under  the  liability  to  pay  it  over  again  to 
the  rightful  proprietor,  if  Brigham  had  not  such  right.  In 
fact  and  law,  Brigham  had  no  such  right,  but  the  plaintiff 
was  at  the  time  the  rightful  proprietor,  and  of  course  the 
defendants  obtained  no  discharge  by  such  payment,  but 
upon  the  maturity  of  the  note  they  were  bound  to  pay  it  to 
the  plaintiff.  The  note  having  been  put  by  Mr.  Goodrich 
into  the  hands  of  a  common  friend,  for  the  use  of  the  party 
entitled,  and  the  plaintiff  having  shown  himself  entitled, 
the  note  was  rightly  brought  in  by  the  person  to  whom  it 
was  thus  intrusted,  as  evidence   for  the  plaintiff. 

Judgment  for  j)laintiff. 


AYMAR  V.    SHELDON. 

Supreme  Court  of  Kew  York,  October,  1834.     12  Wend.  439. 

The  question  of  the  liability  of  indorsers  of  a  foreign  bill  of  exchange 
drawn  and  payable  in  a  foreign  country,  but  indorsed  in  New  York,  upon 
protest  for  non-acceptance  and  notice  thereof,  without  further  steps  at 
maturity,  turns  upon  the  laws  of  New  York. 

Error  from  the  Superior  Court  of  Xew  York  city.  The 
action  was  by  indorsees  against  indorsers  of  a  bill  of 
exchange  drawn  in  the  French  isle  of  Martinique  upon  a 
house  in  Bordeaux,  France,  payable  at  twenty-four  days' 
sight  to  the  order  of  B.  Aymar  &  Co.,  the  defendants,  and 
by  that  firm  indorsed  to  the  plaintiffs  in  the  city  of  Xew 
York,  both  plaintiffs  and  defendants  being  citizens  of  the 
United  States.  The  bill  was  duly  presented  to  the  drawees 
for  acceptance,  and  acceptance  Avas  refused.  Whereupon 
the  bill  was  protested  for  non-acceptance,  and  notice 
thereof  given  to  the  defendants. 

Pleas,  (1)  non-assumpsit;  and  (2)  that  the  bill  was  drawn 
in  Martinique,  an  island  subject  to  France,  that  it  was 
payable  in  France  by  subjects  of  that  kingdom,  that,  by 


374  CASES   ON   BILLS,  NOTES,  AND   CHEQUES. 

the  laws  of  France,  on  protest  for  non-acceptance  the 
indorsers  and  drawer  are  bound  to  give  security  for  the 
payment  of  the  bill  when  due,  and  at  maturity  the  holder 
is  bound  to  present  the  bill  if  payable  at  one  or  more  days 
after  sight,  for  payment,  and  in  case  of  dishonor  must 
protest  the  same  for  non-payment,  and  is  not  excused  by 
reason  of  the  protest  for  non-acceptance,  and  that  there 
had  been  no  protest  for  non-payment.  The  defendants  also 
pleaded  (3)  that  on  notice  of  protest  for  non-acceptance 
they  were  ready  and  willing  to  give  security,  according  to 
the  laws  of  France,  and  offered  to  do  so. 

To  the  second  plea  the  plaintiffs  demurred;  on  the  third 
they  took  issue.  The  second  plea  was  adjudged  bad,  and 
the  case  went  to  trial  upon  the  issues  of  fact.  Verdict 
for  the  plaintiffs  on  the  first  plea,  and  for  the  defendants 
on  the  third. 

Nelsox,  J.,  for  the  court.  — The  only  material  question 
arising  in  this  case  is,  whether  the  steps  necessary  on  the 
part  of  the  holders  of  the  bill  of  exchange  in  question,  to 
subject  the  indorsers  upon  default  of  the  drawees  to  accept, 
must  be  determined  by  the  French  law  or  the  law  of  this 
State.  If  by  our  law,  the  plaintiffs  below  are  entitled  to 
retain  the  judgment;  if  by  the  law  of  France,  as  set  out 
and  admitted  in  the  pleadings,  the  judgment  must  be 
reversed. 

We  have  not  been  referred  to  any  case,  nor  have  any 
been  found  in  our  researches,  in  which  the  point  now  pre- 
sented has  been  examined  or  adjudged.  But  there  are  some 
familiar  principles  belonging  to  the  law  merchant,  or 
applicable  to  bills  of  exchange  and  promissory  notes,  which 
we  think  are  decisive  of  it.  The  persons  in  whose  favor 
the  bill  was  drawn  were  bound  to  present  it  for  acceptance 
and  for  payment  according  to  the  law  of  France,  as  it  was 
drawn  and  payable  in  French  territories;  and  if  the  rules 
of  law  governing  them  were  applicable  to  the  indorsers 
and  indorsees  in  this  case,  the  recovery  below  could  not  be 


AYMAR   V.  SHELDON.  375 

sustained,  because  presentment  for  payment  would  have 
been  essential  even  after  protest  for  non-acceptance.  No 
principle,  however,  seems  more  fully  settled,  or  better 
understood  in  commercial  law,  than  that  the  contract  of 
indorser  is  a  new  and  independent  contract,  and  that  the 
extent  of  his  obligation  is  determined  by  it. 

The  transfer  by  indorsement  is  equivalent  to  the  draw- 
ing of  a  bill,  the  indorser  being  in  almost  every  respect 
considered  as  a  new  drawer.^  Chitty  on  Bills,  42;  3  East, 
482;  2  Burr.  674-5;  1  Strange,  441;  Selw.  N.  P.  256. 
On  this  ground  the  rate  of  damages  in  an  action  against  the 
indorser  is  governed  by  the  law  of  the  place  where  the 
indorsement  is  made,  being  regulated  by  the  lex  loci  con- 
tractus. ^  6  Cranch.  21;  2  Kent's  Comm.  460;  4  Johns. 
E.  119.  That  the  nature  and  extent  of  the  liabilities  of 
the  drawer  or  indorser  are  to  be  determined  according  to 
the  law  of  the  place  where  the  bill  is  drawn  or  indorse- 
ment made,  has  been  adjudged  both  here  and  in  England. 
In  Hix  V.  Brown,  11  Johns.  142,  the  bill  was  drawn  by 
the  defendant,  at  New  Orleans,  in  favor  of  the  plaintiff, 
upon  a  house  in  Philadelphia;  it  was  protested  for  non- 
acceptance,  and  due  notice  given;  the  defendant  obtained 
a  discharge  under  the  insolvency  laws  of  New  Orleans 
after  such  notice,  by  which  he  was  exonerated  from  all 
debts  previously  contracted,  and,  in  that  State,  of  course 
from  the  bill  in  question.  He  pleaded  his  discharge  here, 
and  the  court  say :  *  It  seems  to  be  well  settled,  both  in  our 
own  and  in  the  English  courts,  that  the  discharge  is  to 
operate  according  to  the  lex  loci  upon  the  contract  where 
it  was  made  or  to  be  executed.  The  contract  in  this  case 
originated  in  New  Orleans,  and  had  it  not  been  for  the 
circumstance  of  the  bill  being  drawn  upon  a  person  in 
another  State,  there  could  be  no  doubt  but  the  discharge 
would  reach  this  contract;  and  this  circumstance  can  make 
no  difference,  as  the  demand  is  against  the  defendant  as 
drawer  of  the  bill,  in  consequence  of  the  non-acceptance. 

1  See  Bills  and  Notes  (Students'  Series),  75,  76  2  id_  054. 


376  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

The  whole  contract  or  responsibility  of  the  drawer  was 
entered  into  and  incurred  in  New  Orleans.  The  case  of 
Peters  v.  Brown,  5  East,  124,  contains  a  similar  principle. 
See  also  3  Mass.  E.  81;  Van  Raugh  v.  Van  Arsdalu,  3 
Caines,  154;  1  Cowen,  107;  6  Cranch,  221;  4  Cowen, 
512,  n.' 

The  contract  of  indorsement  was  made  in  this  case,  and 
the  execution  of  it  contemplated  by  the  parties,  in  this 
State ;  and  it  is  therefore  to  be  construed  according  to  the 
laws  of  New  York.  The  defendants  below,  by  it,  here  en- 
gage that  the  drawees  will  accept  and  pay  the  bill  on  due 
presentment,  or,  in  case  of  their  default  and  notice,  that 
they  will  pay  it.  All  the  cases  which  determine  that  the 
nature  and  extent  of  the  obligation  of  the  draiver  are  to  be 
determined  and  settled  according  to  the  law  of  the  place 
where  the  bill  is  drawn,  are  equally  applicable  to  the  in- 
doTser  ;  for,  in  respect  to  the  holder,  he  is  a  drawer.  Adopt- 
ing this  rule  and  construction,  it  follows  that  the  law  of 
New  York  must  settle  the  liability  of  the  defendants  below. 
The  bill  in  this  case  is  payable  twenty -four  days  after  sight, 
and  must  be  presented  for  acceptance  ;  and  it  is  well  settled 
by  our  law  that  the  holder  may  have  immediate  recourse 
against  the  indorser  for  the  default  of  the  drawee  in  this 
respect.  3  Johns.  E.  202 ;  Chitty  on  Bills,  231,  and  cases 
there  cited. 

Upon  the  principle  that  the  rights  and  obligations  of  the 
parties  are  to  be  determined  by  the  law  of  the  place  to 
which  they  had  reference  in  making  the  contract,^  there  are 
some  steps  which  the  holder  must  take  according  to  the 
law  of  the  place  on  which  the  bill  is  drawn.  It  must  be 
presented  for  payment  when  due,  having  regard  to  the  num- 
ber of  days  of  grace  there,  as  the  drawee  is  under  obligation 
to  pay  only  according  to  such  calculation  ;  ^  and  it  is  there- 
fore to  be  presumed  that  the  parties  had  reference  to  it. 
So  the  protest  must  be  according  to  the  same  law,  which  is 

1  See  Bills  and  Notes  (Students'  Series),  249.  2  Id.  252. 


AYMAR   V.  SHELDON.  377 

not  only  convenient,  but  grows  out  of  the  necessity  of  the 
case.  The  notice,  however,  mast  be  given  according  to  the 
law  of  the  place  where  the  contract  of  the  drawer  or  indor- 
ser,  as  the  case  may  be,  was  made ;  ^  such  being  an  implied 
condition.  Chitty  on  Bills,  266,  93,  217 ;  Bayley,  28 ;  Story's 
Conflict  of  Laws,  298. 

The  contract  of  the  drawers  in  this  case,  according  to  the 
French  law,  was  that  if  the  holder  would  present  the  bill 
for  acceptance  within  one  year  from  date,  it  being  drawn 
in  the  West  Indies,  and  it  was  not  accepted,  and  was  duly 
protested  and  notice  given  of  the  protest,  he  would  give 
security  to  pay  it,  and  pay  the  same,  if  default  was  also 
made  in  the  payment  by  the  drawee,   after  protest  and 
notice.     This  is  the  contract  of  the  drawers,  according  to 
this  law,  and  the  counsel  for  the  plaintiffs  in  error  insist 
that  it  is  also  the  implied  contract  of  the  indorser  in  this 
State.    But  this  cannot  be,  unless  the  indorsement  is  deemed 
an  adoption  of  the  original  contract  of  the  drawers,  to  be 
regulated  by  the  law  governing  the  drawers,  without  regard 
to  the  place  where  the  indorsement  is  made.    We  have  seen 
that  this  is  not  so  ;  that  notice  must  be  given  according  to 
the  law  of  the  place  of  indorsement ;  and  if,  according  to 
it,  notice  of  non-payment  is  not  required,  none  of  course  is 
necessary  to  charge  the  indorser.    But  if  the  above  position 
of  the  plaintiffs  in  error  be  correct,  notice  could  not  then 
be  dispensed  with,  the  law  of  the  drawer  controlling.     The 
above  position  of  the  counsel  would  also  be  irreconcilable 
with  the  princiijle  that  the  indorsement  is  equivalent  to  a 
new  bill  drawn  upon  the  same  drawer  ;  for  then  the  rights 
and  liabilities  of  the  indorser  must  be  governed  by  the  law 
of  the  place  of  the  contract,  in  like  manner  as  those  of  the 
drawer  are  to  be  governed  by  the  laws  of  the  place  where 
his  contract  was  made.     Both  stand  upon  the  same  footing 
in  this  respect,  each  to  be  charged  according  to  the  laws  of 
the  country  in  which  they  were  at  the  time  of  entering 
their  respective  obligations. 

1  See  Bills  and  Notes  (Students'  Series),  253. 


378  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

I  am  aware  that  this  conclusion  may  operate  harshly 
upon  the  iudorsers  in  this  case,  as  they  may  not  be  en- 
abled to  have  recourse  over  on  the  drawers.  But  this 
grows  out  of  the  peculiarity  of  the  commercial  code  which 
France  has  seen  fit  to  adopt  for  herself,  materially  differing 
from  that  known  to  the  law  merchant.  We  cannot  break 
in  upon  the  settled  principles  of  our  commercial  law  to 
accommodate  them  to  those  of  France  or  any  other  country. 
It  would  involve  them  in  great  confusion.  The  indorser, 
however,  can  always  protect  himself  by  special  indorse- 
ment, requiring  the  holder  to  take  the  steps  necessary, 
according  to  the  French  law,  to  charge  the  drawer.  It 
is  the  business  of  the  holder,  without  such  an  indorse- 
ment, only  to  take  such  measures  as  are  necessary  to 
charge  those  to  whom  he  intends  to  look  for  payment. 

Judgment  affirmed. 


CARTER  V.   THE  UNION  BANK. 

Supreme  Court  of  Tennessee,  April,  184:7.     7  Humph.  548. 

Whether  demand  of  payment  of  a  foreign  bill  of  exchange  may  be 
made  by  a  notary's  deputy  depends  upon  the  law  of  the  place  in  which  the 
bill  is  payable. 

The  case  is  stated  in  the  opinion. 

Greex,  J.,  for  the  court.  —  This  is  an  action  against  the 
plaintiff  in  error,  as  the  indorser  of  a  bill  of  exchange  drawn 
in  Memphis,  Tennessee,  by  Arthur  Bowen,  on  Fort  &  Wil- 
cox, New  Orleans,  in  favor  of  the  plaintiff  in  error,  for 
$2,500,  and  by  him  indorsed.  The  bill  was  presented  at 
maturity,  payment  demanded,  and  was  protested  for  non- 
pa^-ment,  by  A.  B.  Cends,  a  notary  public  of  New  Orleans. 
The  instrument  of  protest  states  that  the  notary  'by  his 
deputy  McDime,  junior,  presented  said  draft  to  Mr.  Fort,  one 
of  the  members  of  the  firm  of  Fort  &  Wilcox,  the  acceptors, 
at  their  office,  and  demanded  payment  thereof,  and  was  an- 


CARTER  V.  THE  UNION  BANK.  379 

swered  that  the  same  would  not  be  paid.'     The  protest  was 
made  the  11th  Juue,  1845. 

By  an  Act  of  the  General  Assembly  of  Louisiana,  passed 
the  14th  of  March,  1844,  it  is  made  lawful,  for  each  and 
every  notary  public  in  Xew  Orleans,  to  appoint  one  or  more 
deputies  to  assist  him  in  making  of  protests  and  delivery  of 
notices  of  protests  of  bills  of  exchange  and  promissory  notes ; 
provided  that  each  notary  shall  be  responsible  for  the  acts 
of  each  deputy  employed  by  him;  and  provided  that  each 
deputy  shall  take  an  oath  faithfully  to  perform  his  duties 
as  such,  before  the  judge  of  the  parish  in  which  he  may  be 
appointed ;  and  provided  the  certificate  of  notice  of  protest 
shall  state  by  whom  made  or  served. 

The  defendant  at  the  trial  below  objected  to  the  protest 
which  was  offered  as  evidence,  which  objection  was  over- 
ruled by  the  court,  and  the  evidence  was  admitted.  The 
jury  found  a  verdict  for  the  plaintiff,  and  the  defendant 
appealed  to  this  court. 

It  is  now  insisted  that  this  protest  is  not  evidence  of  the 
presentment  and  demand  of  the  bill,  because  it  states  that 
the  demand  was  made  by  the  deputy  of  the  notary. 

It  is  certainly  true,  as  the  general  rule,  that  a  foreign 
bill  must  be  presented  by  the  notary  in  person,  and  demand 
of  payment  made  by  him,  and  that  the  demand  by  his  deputy 
is  not  sufficient.  But  it  is  seen  that  the  law  of  Louisiana, 
where  the  bill  was  payable,  authorizes  the  employment  of  a 
deputy  in  this  service,  and  that  the  protest  must  certify  by 
whom  the  demand  was  made. 

In  Story  on  Bills,  §  276,  treating  of  protests  of  foreign 
bills,  it  is  laid  down,  that  the  protest  '  should  be  made  out 
and  drawn  up  in  the  form  required  by  the  law  or  usage  of 
the  place  where  it  is  made,  and  that  so  essential  is  the  pro- 
duction of  the  protest  that  it  cannot  be  supplied  by  mere 
proof  of  noting  for  non-acceptance  and  a  subsequent  protest 
for  non-payment.'  And  Mr.  Chitty  observes  (Chitty  on  Bills, 
333) :  '■  Wherever  notice  of  non-acceptance  of  a  foreign  bill  is 
necessary,  a  protest  must  also  be  made,  which,  though  mere 


380  CASES  ON  BILLS,  NOTES,  AND  CHEQUES. 

matter  of  form,  is  by  the  custom  of  merchants  indispensably 
necessary,  and  cannot  be  supplied  by  witnesses  or  oath  of 
the  party,  or  in  any  other  way,  and,  as  it  is  said,  is  a  part 
of  the  constitution  of  a  foreign  bill  of  exchange.'  The  mere 
production  of  this  protest,  in  the  case  of  a  bill  payable  and 
protested  out  of  the  countrj'",  will  be  evidence  of  its  dis- 
honor, '  and  to  it  all  foreign  courts  give  credit.'  And  at 
J).  456,  he  says  :  '  With  respect  to  the  protest,  it  should 
always  be  made  according  to  the  law  of  the  place  where  the 
payment  ought  to  have  been  made,  though  with  regard  to 
notice  of  dishonor,  it  must  be  given  to  the  drawer  within 
the  time,  and  according  to  the  laws  of  the  place  where  the 
bill  was  drawn,  and  to  the  indorsers  according  to  the  law  of 
the  place  where  the  indorsements  were  made.' 

These  authorities  settle  the  question,  and  establish  the 
following  propositions  :  1.  That  a  protest  is  indispensable 
to  the  dishonor  of  a  foreign  bill  of  exchange  ;  2.  That  the 
protest  is  to  be  made  according  to  the  law  of  the  place  where 
the  bill  is  payable ;  3.  That  the  protest,  properly  authen- 
ticated, is  evidence  by  its  mere  production  of  the  present- 
ment and  demand,  in  all  foreign  courts  where  the  dishonor 
of  the  bill  is  required  to  be  proved ;  4.  That  no  other 
evidence  of  the  facts  stated   in  the  protest  is  competent.^ 

The  protest  in  the  present  case  was  made  according  to 
the  law  of  Louisiana,  where  the  bill  was  payable,  and  there- 
fore is  evidence  here  of  the  dishonor  of  the  bill. 

It  is  objected  that  there  is  no  evidence  that  Memphis 
was  the  defendant's  place  of  residence.  It  appears  that, 
annexed  to  the  name  of  the  defendant  on  the  bill,  is  added 
'Memphis,  Tennessee.'  This  we  regard  as  part  of  his 
indorsement,  and  as  sufficient  authority  to  authorize  the 
holder  to  send  the  notice  to  Memphis. 

Affirm  th e  judgm  ent, 

1  See  Bills  and  Notes  (Students'  Series),  107. 


INDEX. 


INDEX. 


A. 

ABSCONDING, 

as  excuse  of  presentment,  115,  145,  211,  212. 

ABSENCE   OF   MAKER, 
from  home,  195-204. 

ABSOLUTE  DEFENCES, 

paper  void  by  statute,  286,  290,  292. 

want  of  delivery,  227-243. 

fraud  in  obtaining  possession  of  paper  not  delivered,  227-243. 

fraud  in  regard  to  nature  of  contract,  237-243. 

fraud  in  filling  blanks  in  completed  paper,  258-267. 

alteration.     {See  Alteration.) 

forgery  of  signature.     (See  Fobgeky.) 

ACCEPTANCE, 
by  stranger,  45. 
written,  48. 
words  of,  48. 
promise  of,  49. 
admits  drawer's  signature,  249,  250,  267-269. 

but  not  body  of  bill,  250-253,  274-276. 
rule  that  acceptance  admits  drawer's  signature  qualified,  270-274. 
does  not  admit  payee's  signature,  274-276. 

except  when,  274-276. 

ACCIDENT, 

inevitable,  as  excuse  of  steps,  132-142. 

ACCOMMODATION   PAPER, 

notice  to  purchaser,  214-219. 

of  fraudulent  diversion,  215-219. 
taken  after  maturity,  319-326. 


384  INDEX. 

ACCOMMODATION  PAPER,  —  continued. 

Englisli  rule  different  from  American,  322-326. 
releasing  drawer  of  bill  accepted  for  drawer's  accommodation,  342- 
355. 

ADMINISTRATOR, 

{See  Executor.) 

AGENCY, 

exempting  agent  from  liability,  25-28. 

agent  treated  as  principal  as  to  time  of  notice  of  dishonor,  179. 

ALTERATION, 

immaterial,  244-248. 
cases  reviewed,  245-248. 
of  date,  253-255. 
raising  sum,  256-258. 

adding  words  in  blank  left  in  completed  instrument,  258-267. 
rule  of  two  innocent  persons,  255,  261,  262. 

{See  Forgery.) 

ANNE,   STATUTE  OF,  1-11,  127-132. 

ANOMALOUS   SIGNATURE, 
before  that  of  payee,  29-45. 
New  York  rule,  29. 
Vermont  rule,  35. 
Massachusetts  rule,  38. 

ATTORNEY   FEES, 
added  to  promise,  15. 

B. 

BAD  FAITH, 

taking  paper  under  circumstances  of  negligence,  not,  293-295. 

BANK, 

paper  payable  at,  156,  212,  213. 

BANK   NOTES, 

stolen  before  delivery,  236. 

BILL   OF  EXCHANGE, 

drawn  on  bank,  payable  on  demand,  query,  68,  note. 

BLANK   SPACES, 

filling  of,  fraudulently,  in  completed  paper,  258-267. 

BURDEN  OF  PROOF, 

in  case  of  duress,  fraud,  or  illegality,  311-316. 
in  case  of  want  of  consideration,  314. 


INDEX.  385 

BUSINESS  PLACE, 

what  constitutes,  108-110. 
temporary  stay  in  a  town,  195-204. 

c. 

CAPACITY, 

of  payee,  in  suit  against  prior  party,  93,  94. 

of  corporation  to  execute  negotiable  paper,  284-286. 

of  insane  person,  282-284. 

CARPENTER'S    WORK, 
paper  payable  in,  11. 

CERTAINTY, 

of  payment,  18. 
of  time,  19,  24. 

CERTIFICATION   OF   CHEQUE, 
by  drawer  for  himself,  69-73. 
by  payee  or  holder,  69-73. 
not  acceptance  of  a  bill,  71. 

CHEQUE, 

not  properly  a  bill  of  exchange,  70. 
certifj'ing,  69-73. 

COLLATERAL   SECURITY, 

paper  held  as,  22,  296-311. 

COMPETENCY, 

(See  Capacity.) 

COMPOSITION  DEED, 

with  reservation  of  remedies,  334-342. 

CONDITION, 

paper  held  as  security,  22. 

CONFLICT   OF   LAWS, 

liability  of  drawer  or  indorser,  373-378. 

law  of  place  contemplated  by  the  parties,  376. 

as  to  right  of  protest  by  deputy,  378-880. 

CONGRESS, 

residence  of  member  of,  200,  201. 

CONSIDERATION, 

in  guaranty,  221-225. 
statement  of,  in  guaranty,  221-225. 

distinction  between  guaranty  subsequent  and  guaranty  contempora- 
neous, 221-225.     (See  Valuable  Consideration.) 
illegal,  311-316. 
valuable,  296-311. 

25 


386  Dy-DEX. 

COXTRACT, 

persons  not  parties  to,  51-55. 

CORPORATIONS, 

power  to  execute  negotiable  paper,  284-286. 

CUSTOM   OF  MERCHANTS,  1-11. 

D. 

DAMAGE, 

question  of,  on  want  of  notice  of  dishonor,  207-209. 

DATE, 

as  evidence  of  place  of  payment,  111-122. 

DEATH, 

of  maker,  142-145. 

DELIVERY, 

necessary  to  liability  even  as  to  bona  fide  holder  for  value,  227-236. 

obtained  fraudulently,  227-236,  237-218. 

rule  in  regard  to  innocent  persons  one  of  whom  must  bear  the  loss, 

231-234. 
lost  or  stolen  paper  once  delivered,  232,  283. 
negligence,  235,  237,  240. 
stolen  bank  notes,  not  delivered,  236. 

DEMAND, 

{See  Presentment  and  Demand.) 

DILIGENCE, 

reasonable,  enough,  191-195. 

DISCHARGE, 

(See  Payment.) 

DISCHARGE    OF   SURETY, 
agreement  for  time,  329-334. 

DRAWEE,   ■ 

not  bound  to  know  hand  of  body  of  paper,  249-253. 

aliter  of  drawer's  signature,  219,  267-269. 

except  when,  270-274. 

may  become  holder  and  sue  upon  the  paper,  361-304. 

DRAWER'S   CONTRACT, 

drawer  of  cheque   presumptive!}'   entitled   to   notice   of  dishonor, 

59,  note, 
drawer  of  clieque  not  prejudiced  bj'  want  of  notice,  64-66. 
time  for  presenting  demand  draft,  66-68. 


INDEX.  387 

DRAWER'S   SIGNATURE, 

acceptance  an  admission  of,  249,  250-253,  274-276. 
qualification  of  rule,  270-274. 

DURESS, 

burden  of  proof  where  paper  was  executed  under,  316. 

E. 
EQUITIES, 

not  available  against  bona  fide  holder  for  value,  225-227. 

ESTOPPEL, 

negligence  in  delivery,  235,  237,  240. 

facilitating  alterations,  258-267. 

paying  forged  bills,  277-282. 

EVIDENCE, 

parol,  to  control  indorsement,  84-91. 

EXCUSE   OF  NOTICE, 

by  waiver,  204-207,  209,  210,  212,  218. 
no  damage  by  want  of  notice,  207-209. 
does  not  excuse  presentment,  212,  218. 

EXCUSE   OF  PRESENTMENT, 

absconding,  115,  145,  211,  212. 
inevitable  accident,  132-142. 
mistake  of  post-office,  132-142. 
excuse  of  notice,  not  an,  212,  218. 

EXECUTOR, 

consent  of,  to  make  title,  78-82. 

indorsement  by,  78,  note. 

period  of  exemption  from  suit,  142-145. 

notice  of  dishonor  to,  before  qualification  good,  169-171. 


FORBEARANCE, 

agreement  for,  329-334. 

FOREIGN   BILLS, 
history  of,  1-7. 

FORGERY, 

of  signature  before  defendant's,  91-93. 

immaterial  alteration,  244-248. 

in  body  of  bill  may  be  shown  by  drawee,  249-253. 

but  not  in  drawer's  signature,  249,  250. 
in  date,  253-255. 


388  INDEX. 

FORGERY,  —  continued. 

rule  of  two  innocent  persons,  255,  261,  262. 
raised  sum,  and  suit  to  recover  original  amount,  256-258. 
adding  words  in  blank  left  in  completed  instrument,  258-267. 
negligence,  264. 

paying  forged  paper  as  an  estoppel,  277-282. 
(<See   Alteration.) 

FRAUD,  *   ' 

in  obtaining  paper  not  delivered,  227-243. 
in  regard  to  nature  of  contract,  237-243. 
in  reading  or  stating  contract,  240,  241. 
upon  illiterate  person,  240,  241. 
in  filling  blank  in  completed  instrument,  258-267. 

FUNDS, 

what  meant  by  having,  59-64. 

G. 

GENUINENESS, 

( ^ee  Acceptance  ;    Alteration;   Forgery.) 

GOOD   FAITH, 

taking  paper  under  circumstances  of  negligence,  293-295. 

GRACE, 

on  instalment  notes,  127-132. 
demand  on  lust  day  of,  178. 

GROSS   NEGLIGENCE, 

in  taking  paper  not  bad  faith,  298-295. 

GUARANTY   AND   SURETYSHIP, 
guarantor  not  an  indorser,  219,  220. 
consideration  for  guaranty,  221-225. 
guaranty  subsequent,  221-225. 
guarantj"^  contemporaneous,  221-225. 
statement  in  writing  of  consideration,  221-225. 
agreement  to  give  time  to  principal  debtor,  329-334. 

H. 

HISTORY, 

of  custom  of  merchants,  1-11. 

HOLDER   FOR   VALUE, 

paper  taken  for  pre-existing  debt,  296-311. 

(6ee  Valuable  Consideration.) 


INDEX.  389 

HOLDER'S   POSITION, 

who  is  holder,  173,  174. 
presumptive  right  of  action,  225-227. 
equities  and  set-off,  225-227. 

I. 

ILLEGALITY, 

right  of  indorser  to  prove,  in  contract  of  prior  party,  94-99. 
of  consideration,  311-316. 
ILLITERATE   PERSON, 
fraud  upon,  240,  241. 

INDORSEMENT, 
anomalous,  29-45. 
necessity  of,  73-76. 

holder  of  unindorsed  paper  payable  to  order,  73-76. 
made  in  cipher,  77. 
joint,  83. 

control  of,  by  parol  evidence,  84-91. 
obtained  by  fraud  as  to  nature  of  contract,  237-243. 

INDORSER'S   CONTRACT, 
stated,  100,  101,  181,  182. 

INEVITABLE   ACCIDENT, 

as  excuse  of  steps,  1.32-142. 

duty  after  obstacle  ceases,  140-142. 

INLAND   BILL, 

history  of,  7,  11. 

INSANITY, 

of  payee-indorser,  282-284. 

makes  contract  voidable,  not  void,  283. 

INSTALMENT   NOTES, 
dishonor  of,  127-132. 
grace  on  instalments,  127-132. 

INUREMENT, 

of  notice  by  indorser  in  favor  of  holder,  167-169. 


JOINT  INDORSEMENT, 

what  constitutes,  83,  84. 


LEGAL   OR   ABSOLUTE   DEFENCES, 

(See  Absolute  Defences.) 


390  INDEX. 

LOST  PAPER, 

bona  fide  holder  for  value  of,  232,  233. 

M. 
MAIL, 

misdelivery  by,  1.32-142. 

notice  of  dishonor  by,  171-179. 

[See  Post-Office.) 

MAKER, 

notice  that  his  note  is  lodged  in  bank  for  collection,  108. 
MATURITY, 

negotiable  paper  overdue  does  not  lose  negotiability,  317-319, 

accommodation  paper  taken  after,  319-326. 

MEMBER   OF   CONGRESS, 
residence  of,  200,  201. 

MISTAKE, 

money  paid  by,  in  case  of  forgery,  249-253,  267-269. 
of  post-office  as  excuse  of  steps,  132-142. 
in  notice  of  dishonor,  152-157. 

MONEY, 

carpenter's  work  not,  11. 
ore  of  mine,  19. 

N. 
NEGLIGENCE, 

in  regard  to  delivery,  235,  237,  240. 

in  regard  to  blanks,  264. 

in  taking  negotiable  paper  not  bad  faith,  293-295. 

NEGOTIABILITY, 

does  not  cease  at  maturity,  317-319. 

NOTARY, 

acting  by  deputy,  378-380. 

NOTICE  OF   DISHONOR, 

to  drawer  having  no  funds,  59-64. 

reasonable  ground  to  draw,  59-64. 

drawer  of  cheque  presumptively  entitled  to,  59,  note. 

mistakes  in,  152-157. 

not  necessarily  fatal,  152-157. 
object  of  notice,  156. 
what  it  should  show,  156,  157-161. 
practice  in  cities,  157. 
mere  notice  of  non-payment,  157-167. 


INDEX.  391 

NOTICE   OF   DISHONOR,  —  con^nwec?. 
cases  reviewed,  160-166. 
inurement  in  favor  of  holder,  167-169. 
to  an  executor  before  qualification  good,  169-171. 
personal  notice  necessary  when,  171-175. 
when  seasonable,  177-191. 
whether  a  whole  day  allowed  for,  179-191. 
notice  to  one  of  several  indorsers,  179. 
agent  treated  as  principal,  as  to  time,  179. 

NOTICE   OF   EQUITIES, 

taking  accommodation  paper  with  notice  of  fraudulent   diversion, 

215-219. 
taking  accommodation  paper  after  maturity,  319-326. 
holder  with,  taking  from  one  who  had  no,  326-328. 

o. 

'ON  OR  BEFORE,' 

payment  so  provided,  18. 

P. 

PARTNERS, 

acceptance  by  and  demand  upon,  150-152. 

PAYEE, 

in  alternative,  11. 

administrator  as,  14. 

capacity  of,  in  suit  against  prior  party,  93,  94. 

PAYMENT, 

'on  or  before,'  18. 

place  of,  111-122. 

by  indorser  for  his  own  release  merely,  356-361. 

holder  may  recover  full  sum  of  maker  or  acceptor  in  such  case, 

3.5(i-361. 
by  indorser  on  behalf  of  maker  or  acceptor,  356-361. 
discount  of  bill  by  drawee  not  payment,  361-364. 
when  to  be  madp  and  how,  in  case  of  negotiable  paper,  365-373. 

PLACE   OF   PAYMENT, 

paper  payable  in  another  State,  111-122. 

payable  generally,  115. 

absconding,  115. 

seamen,  115. 

no  known  residence,  115. 

removal,  116,  118. 


392  INDEX. 

POST-OFFICE, 

mistake  of,  as  excuse  of  steps,  132-142. 

notice  of  dishonor  through,  171-17'J. 

posting  letter  containing  notice  may  be  enough,  176,  177. 

PRE-EXISTING   DEBT, 

as  a  valuable  consideration,  296-311. 

PRESENTMENT   AND   DEMAND, 
necessity  of  presentment,  lOU-108. 
place  of,  111-122. 
paper  payable  generally,  115. 
absconding,  115. 
seamen,  115. 

no  known  residence,  115. 
removal,  116,  118. 
of  sight  bills,  wiien,  122-126. 
at  near  midnight,  116-148. 
reasonable  hour,  147,  148-150. 
business  hours,  147. 
in  evening,  148-150. 

paper  payable  at  designated  place,  165,  212,  213. 
in  case  of  joint  promise,  208,  210. 

(See  Excuse  of  Presentment.) 

PRESUMPTION, 

from  fraud,  duress,  or  illegality,  311-316. 

PROMISSORY  NOTE, 
history  of,  7-11. 

PROMISE   TO  ACCEPT, 

not  negotiable,  49. 

who  may  have  benefit  of,  49. 

description  of  paper,  56. 

how  it  differs  from  acceptance,  56. 

PROMISE   TO    PAY, 

as  waiver  of  steps,  204,  207,  209,  210. 

PROTEST, 

certificate  of,  as  evidence,  100-108,  150-152,  380. 

form  of,  101. 

what  it  should  state,  101,  102,  150-152. 

Louisiana  law  of,  102-107. 

of  partnership  acceptance,  150-152. 

conflict  of  laws  as  to,  376,  .377,  380. 

by  notary's  deputy,  378-380. 

of  foreign  bill  indispensable,  380. 


INDEX.  393 

PUTTING   UPON  INQUIRY, 

negligence  in  taking  paper,  293-295. 

R. 

READING  CONTRACT, 
fraud  as  to,  240,  241. 

REASONABLE   DILIGENCE. 

to  find  maker,  191-195. 

REASONABLE   GROUND, 

for  drawing  bill  or  cheque,  59-64. 

REASONABLE   TIxME, 

for  presenting  sight  hill,  122-126. 

RELEASE, 

of  prior  party  may  discharge  later,  328. 
reserving  remedy  against  later  party,  334-312. 
technical  sense  of,  340. 

releasing   drawer  of  bill  accepted    for    drawer's    accommodation, 
342-355. 

REMOVAL, 

as  excuse  of  presentment,  116,  118. 

RESIDENCE, 

reasonable  diligence  to  find  maker's,  191-195. 
temporary  absence  from,  195-204. 
of  member  of  Congress,  200,  201. 

S. 

SEAMEN, 

having  no  known  place  of  residence,  115. 

SEASONABLE  NOTICE, 
what  is,  177-191. 

SECURITY. 

paper  held  as,  22,  296-311. 

SET-OFF, 

not  available  against  bona  fide  holder  for  value,  225-227. 

SIGHT   BILLS, 

to  be  presented  when,  122-126. 

SIGNATURE, 

need  not  be  at  end,  25. 

in  cipher,  77. 

of  drawer.     (6'ee  Acceptance.) 


394  INDEX. 

STATUTE, 

declaring  paper  void,  286-290 
Sunday,  290-293. 
usury,  292. 

STOLEN   PAPER, 

bona  fide  holder  for  value  of,  232,  233. 
stolen  bank-notes,  not  delivered,  236. 

SUNDAY, 

paper  delivered  on,  290-293. 

SURETYSHIP, 

(See  Guaranty  and  Suretyship.) 

SURRENDER   OF   PAPER, 

on  payment,  305-373. 

SUSPICION, 

taking  paper  with  suspicion  of  equities,  295,  note. 

T. 

TIME, 

'  on  or  before,'  18. 

certainty  of,  19,  24. 

of  presenting  demand  draft,  66-68. 

general  rule,  137. 

of  notice,  177-179. 

agreement  for  time  to  principal  debtor,  829-334. 

TRUSTEES, 

exempting  themselves  from  liability,  25. 

U. 

USURY, 

right  of  indorser  to  prove,  in  maker's  contract,  94-99. 
paper  void  for,  is  void  in  hands  of  bona  fide  holder  for  value,  291, 
292,  314,  315. 

V. 

VALUABLE   CONSIDERATION, 
holder  for,  296-311. 

paper  taken  for  pre-existing  debt  or  as  collateral  security,  296-311. 
New  York  rule,  296-300. 
rule  in  United.  States  courts,  300-311. 

VOID, 

paper  so  declared  by  statute,  286-290,  292. 


INDEX.  395 

VOIDABLE, 

indorsement  by  insane  person,  282-284. 
paper  delivered  on  Sunday,  290-293. 

W. 
WAIVER, 

promise  to  pay  before  or  after  maturity,  204-207,  209,  210. 

knowledge  of  facts,  204-207,  209,  210. 

waiving  notice  not  an  excuse  of  demand,  212,  213. 

(i^ee  ExcusK  of  Notice;   Excose  of  Tresentment.) 


THE  STUDENTS'  SERIES. 


CAREFULLY  PREPARED  TREATISES 

BY  COMPETENT   WRITERS   ON  THE   ELEMENTS  OF  THE   LAW. 

COVERING   SUBJECTS   TAUGHT  IN   DISTINCT  COURSES 

IN   THE  LEADING  LAW   SCHOOLS. 

AMONG  the  authors  who  have  prepared  volumes  for  this  important  series 
are  Melville  M.  Bigelow,  LL.D.,  the  distinguished  law  writer, 
and  lecturer  at  Boston  University,  Northwestern  Universit)',  and 
Michigan  University;  Prof.  Eugene  Wambaugh,  late  of  Iowa  State 
University,  now  of  the  Law  Department  of  Harvard  University;  Prof. 
William  C.  Robinson,  of  Yale  College,  now  head  of  the  Law'  Depart- 
ment of  the  Catholic  University,  Washington,  and  author  of  "  The  Law  of 
Patents"  :  Hon.  Thomas  M.  tooLEY,  the  eminent  author  of  "Constitu- 
tional Limitations";  Edwin  E.  Bryant,  Dean  of  the  Law  Department  of 
the  State  University  of  Wisconsin;  Marshall  D.  Ewell,  LL.D.,  M.D., 
of  the  Kent  College  "of  Law,  Chicago;  the  late  Benjamin  R.  Curtis.  Justice 
of  the  United  States  Supreme  Court,  and  lecturer  at  Harvard  University; 
Prof.  Edward  Avery  Harriman,  of  the  Northwestern  University  Law 
School;  Prof.  Ernest  W.  Huffcut,  of  Cornell  University  School  of  Law; 
Prof.  Francis  M.  Burdick,  of  the  Law  School  of  Columbia  University; 
Arthur  G.  Sedgwick,  the  well-known  writer;  William  Wirt  How"e, 
formerly  Chief  Justice  of  Louisiana ;  the  late  Judge  John  Wilder  Mait,  etc. 

VOLUHES  ALREADY  ISSUED  IN  "THE  STUDENTS'  SERIES." 

I.  Bigelow's  Elements  of  the  Law  of  Bills,  Notes,  and  Cheques. 

II.  Bigelow's  Elements  of  Equity. 

III.  Bigelow's  Elements  of  the  Law  of  Torts. 

IV.  Bigelow's  Law  of  Wills  for  Students. 
V.  Bryant's  Principles  of  Code  Pleading. 

VI.  Burdick's  Law  of  Sales. 

VII.  Cooley's  General  Principles  of  Constitutional  Law  in  the  United 
States  of  America. 
VIII.  Curtis's  Jurisdiction,  Practice,  and  Peculiar  Jurisprudence  of 
the  Courts  of  the  United  States. 
IX.  Ewell' s  Manual  of  Medical  Jurisprudence  for  the  Use  of  Stu- 
dents at  Law  and  of  Medicine. 
X.  Harriman's  Elements  of  the  Law  of  Contracts. 
XI.  Heard's  Principles  of  Civil  Pleading. 
Xn.  Heard's  Principles  of  Criminal  Pleading. 
XII [.  Howe's  Studies  in  the  Civil  Law. 
XIV.  Huffcut's   Elements   of   the  Law  of  Agency  as  relating  to 

Contract. 
XV.  May  on  the  Law  of  Crimes. 
XVI.  Robinson's  Elementary  Law. 

XVII.  Robinson's  Forensic  Oratory:  A  Manual  for  Advocates. 
XVIII.  Sedgwick's  Handbook  of  the  Law  of  Damages. 
XIX.  Stephen's  Digest  of  the  Law  of  Evidence. 
XX.  Stimson's  Glossary  of  Technical  Terms,  Phrases,  and  Maxims 

of  the  Common  Law. 
XXI.  Wambaugh  on  the  Study  of  Cases. 


The  Volumes  are  of  12mo  size,  containing  from  300  to  400  closely  printed 
pages.    Price  per  Volume :  cloth,  S2.50  net ;  law  sheep,  §3.00  net. 

E^^  See  also  list  of  "  Cases  "  on  next  page. 

1 


THE  STUDENTS'  SERIES. 


CASES  TO  ACCOnPANY  "THE  STUDENTS'  SERIES." 

Beale's  Cases  on  the  Law  of  Damages. 

Eigelow's  Cases  on  the  Law  of  Bills,  Notes,  and  Cheques. 

Bigelow's  Cases  on  the  Law  of  Torts. 

Burdick's  Cases  on  Partnership  (8vo.  $4.50  net). 

Burdick's  Cases  on  Sales  ^Svo.  $4.50  net). 

Chaplin's  Cases  on  Criminal  Law. 

Hutt'cut's  Cases  on  Agency. 

Wambaugh's  Cases  for  Analysis. 


The  Vohinies  of  Cases  are  bound  in  cloth  only,  and  unless  other- 
tvise  stated,  the  size  is  small  8vo,  and  the  price  $3,00  net. 


In  planning  and  developing  the  Students'  Series,  five  objects  have  been 
constant!}'  sought :  — 

FiKST.  That  each  subject  should  be  treated  by  a  man  specially  fitted 
through  study,  training,  and  experience. 

Second.  That  the  arrangement  should  be  logical,  and  the  treatment 
concise,  clear,  and  comprehensive. 

Third.  That  the  principles  of  the  law  of  each  subject,  the  real  founda- 
tion and  framework,  should  be  so  carefull}'  and  clearly  presented  and 
explained  that  the  student  could  grasp  the  facts  and  the  reasons  for  them, 
and  feel  with  these  firmly  in  mind  that  he  would  be  able  to  handle  success- 
fully the  variations  which  may  come  later. 

Fourth.  That  the  cases  cited  and  commented  on  should  be  those  on 
which  the  law  rests,  and  which  most  clearly  show  how  and  why  the  law 
became  what  it  is.  Not  quantity  of  citations,  but  quality  and  strength, 
have  been  sought. 

Fifth.  That  the  cost  of  the  volumes  should  be  kept  as  low  as  possible, 
consistent  with  the  highest  standards,  both  of  authors'  text  and  quality  of 
manufacture. 

Teachers  and  students  alike  understand  the  advantage  of  ha^^ng  books 
prepared  for  them  by  men  who  are  specialists,  and  who  devote  themselves 
to  the  subjects  on  which  they  write.  With  such  requirements  books  cannot 
be  written  to  order  in  three  or  four  months,  and  several  years  have  been 
spent  in  building  up  the  Students'  Series  to  its  present  size,  while  a  num- 
ber of  works  on  other  important  subjects  are  now  in  careful  preparation. 

The  volumes  of  the  Students'  Series  are  in  use  as  text-books  in  leading 
law  schools  throughout  the  United  States.  Of  them,  one  of  the  most  learned 
teachers  of  law  in  America,  the  late  Prof.  William  G.  Hammond,  of  St. 
Louis,  said  :  — 

"  In  planning  this  series  of  law  books  for  students  you  have  rendered  a  very 
great  service,  not  only  to  the  students  themselves,  but  also  to  the  profession. 
There  has  been  no  greater  obstacle  to  aU  efforts  for  a  higher  standard  of  legal 
education  than  the  lack  of  such  books." 

And  this  testimony  as  to  the  plan  has  been  repeated  as  to  execution,  by 
numbers  of  prominent  teachers  in  letters  to  the  authors  and  publishers,  and 
by  the  more  valuable  testimony  of  introduction  and  use  with  their  classes. 

g^"*  See  subsequent  pages  for  full  information  regarding  each  work. 

2 


THE  STUDENTS'   SERIES. 


BIGELOW  ON  BILLS  AND  NOTES. 

Elements  of  the  Law  of  Bills,  Notes,  and  Cheques,  for  Students.     By 

Melville  M.  Bigelow,  Ph.D.,  author  of  "  Elements  of  the  Law 

of  Torts,"  etc.     12mo.     Clotli,  $2.60  net;  law  sheep,  §3.00  net. 

Mr.  Bigelow's  reputation  as  a  clear,  logical,  and  strong  student  and  in- 
structor in  the  law  is  established  by  his  standard  treatises  no  less  than  by 
the  masterly  "Elements  of  Torts,"  so  well  known  to  and  extensively  used 
by  teachers  and  students  of  law.  This  book  is  a  discussion  of  the  elements 
of  the  Law  of  Bills  and  Notes,  not  an  elementary  treatise  in  the  sense  of 
touching  on  the  simpler  questions  only.  The  groundwork  of  the  law,  com- 
plex as  well  as  simple,  is  discussed  fully,  clearly,  and  exhaustively.  Cases 
that  are  really  leading  cases  are  referred  to  in  sufficient  number  to  illustrate 
and  support  the  points  of  law  stated. 

It  is  particularly  adapted  for  students'  work.  —  J.  C.  Knowlton,  Law  Depart- 
ment, Michigan  State  University. 

It  bears  evidence  of  the  conciseness  and  power  of  accurate  statement  which 
characterize  the  other  work  of  the  author,  and  I  am  convinced  that  it  wiU  prove 
a  very  satisfactory  book  for  class  use.  —  Emles  McLain,  Chancellor  Law  Depart- 
ment, Iowa  State  University. 

It  is  written  with  the  clearness,  force,  and  logic  characteristic  of  the  learned 
author.  lu  the  arrangement  —  in  what  it  includes,  and  in  what  it  omits  as  well  — 
one  can  easily  discern  the  hand  of  the  practised  teacher,  as  well  as  of  the  experi- 
enced legal  writer.  —  Prof.  E.  W.  HuFFcnT,  Cornell  University  School  of  Law. 

I  believe  it  to  be  decidedly  the  best  student's  book  upon  the  subject  that  has 
yet  appeared.  —  Prof.  F.  R.  Mechem,  Law  Department,  Michigan  State  University. 

To  accompany  the  above  :  — 

Cases  on  the  Law  of  Bills,  Notes,  and  Cheques.     Edited  by  Melville 

M.  Bigelow.     Crown  8vo.     Cloth,  $3.00  net. 


BIGELOW  ON  EaUITY. 

Elements  of  Equity  for  the  Use  of  Students.  By  Melville  M. 
Bigelow,  Pli.D.,  lecturer  in  the  School  of  Law,  Boston  University, 
author  of  "  Elements  of  the  Law  of  Torts,"  etc.  12mo.  Cloth, 
$2.50  net;  law  sheep,  $3.00  net. 

It  is  to  be  commended  for  its  clearness  and  conciseness  of  statement.  I  regard 
the  first  chapter  as  a  model.  The  doctrines  of  Tacking,  Subrogation,  and  Marshal- 
ling, found  in  Chapters  14,  19,  and  20,  are  more  easily  comprehended  than  in  any 
other  work  on  those  subjects  that  I  have  seen.  — Hon.  J.  H.  Carpenter,  Dean  of 
Law  Faculty,  University  of  Wisconsin. 


BIGELOW  ON  TORTS. 

Elements  of  the  Law  of  Torts  for  the  Use  of  Students.  By  Melville 
M.  Bigelow,  Ph.D.,  author  of  "A  Treatise  on  the  Law  of  Estop- 
pel," "  A  Treatise  on  the  Law  of  Fraud,"  etc.  Sixth  edition,  re- 
vised and  enlarged.    12mo.    Cloth,  $2.50  nef;  law  sheep,  $3.00  ?ie<. 

3 


THE  STUDENTS'   SERIES. 


In  the  sixth  edition  of  this  well-known  text-book  the  author  has  devoted 
much  time  and  care  to  the  development  of  the  general  doctrine  of  "  Torts  " 
as  an  introduction  to  the  study  of  "  Specific  Torts."  This  work,  done  with 
his  usual  thoroughness  and  clearness,  does  away  with  the  one  criticism  made 
on  the  work,  that  it  plunged  the  student  into  the  studj'  of  specific  torts 
without  instructing  him  in  the  general  law  of  the  subject.  The  whole  book 
has  been  carefully'  revised,  and  many  passages  rewritten.  The  book  is  now 
theoretically  and  practicall}'  complete  and  logical. 

It  seems  to  me  admirably  adapted  to  the  purpose  for  which  it  is  written.  Mr. 
Bigelow  is  very  happy  in  his  statement  of  legal  principles,  and  nowhere  so  much  so, 
I  think,  as  in  this  book.  —  Hon.  Thomas  M.  Cooley. 

I  have  examined  Bigelow  on  Torts,  and  find  it  to  be  an  excellent  text-book  for 
students.  The  author  is  plainly  a  master  of  his  subject,  and  not  merely  a  good 
compiler.  .  .  .  The  work  is,  in  my  judgment,  a  model  "Institute."  —  R.  McP. 
Smith,    Vanderbilt  University. 

A  clear  and  compact  treatise,  well  fitted  to  be  a  manual  of  a  student  of  law.  — 
Hon.  John  Bascom,  University  of  Wisconsin. 

To  accompany  the  above :  — 
Cases  on  the  Law  of  Torts.    Edited  by  Melville  M.  Bigelow. 
Crown  8vo.     Cloth,  $3.00  net. 


BIGELOW'S  LAW  OF  WILLS. 

The  Law  ofWills.  For  Students.  By  Melville  M.  Bigelow,  Ph.D., 
author  of  "  Elements  of  the  Law  of  Torts,"  etc.,  editor  of  "  Sixth 
American  Edition  of  Jarman  on  Wills,"  etc.  12mo.  Cloth, 
$2.50  net ;  sheep,  $3.00  net. 

No  teacher  of  law  in  America  is  more  familiar  with  the  theory  of  the 
Law  of  Wills  than  Mr.  Bigelow,  and  students  everywhere  are  to  be  con- 
gratulated on  the  publication  of  a  new  work  on  this  subject  by  an  author 
so  experienced  and  so  learned. 


BRYANT'S  CODE  PLEADING. 

The  Principles  of  Code  Pleading  for  the  Use  of  Students.    By  Edwin 

E.  Bryant,  Dean  of  the  Law  Department  of  the  State  University 

of  Wisconsin,  and  late  Assistant  Attorney- General  of  the  United 

States.     12mo.     Cloth,  $2.50  net ;  law  sheep,  $3.00  net. 

The  science  of  code  pleading  being  a  development  of  the  last  fifty  years, 

and  getting  its  shape  and  form  gradually  from  the  decisions  of  the  courts  as 

well  as  from  the  enactments  of  the  law-making  bodies,  has  only  within  a  few 

years  been  treated  in  any  satisfactory  way  by  text  writers. 

Many  instructors  feel,  however,  that  too  much  time  is  needed  for  the 
student  to  get  the  elementary  principles  from  the  larger  books;  and  this 
book  is  written  to  bring  within  easy  reach,  in  condensed  and  clear  form, 

4 


THE  STUDENTS'   SERIES. 


the  true  elements  of  the  subject ;  to  give  the  student  sufficient  knowledge 
of  the  old  common  law  pleading  for  a  foundation  for  the  less  formal,  but 
not  necessarily  less  exact,  pleading  under  the  code,  and  to  put  in  orderly- 
array  the  principles  of  this  branch  of  the  law,  which  have  too  frequently 
been  considered,  by  students,  at  least,  as  of  little  importance. 

The  principles  are  presented  in  a  clear,  satisfactory  manner,  and  the  Code 
References  are  a  valuable  addition.  In  short,  it  exactly  supplies  a  want  as  a 
text-book  for  students,  whether  in  offices  or  law  schools,  wherever  the  reformed 
procedure  prevails  or  is  largest.  —  Charles  M.  Campbell,  Law  Department, 
Colorado  State  University. 

BURDICK  ON  SALES. 

The  Law  of  Sales  of  Personal  Property.  By  Fkancis  M.  Burdick, 
of  the  Law  School  of  Columbia  University.  12mo.  Cloth,  $2.50 
net;  law  sheep,  $3.00  net. 

In  this  work  by  an  author  and  teacher  of  reputation  and  experience, 
questions  are  discussed  with  a  fulness  proportioned  to  the  trouble  they  give 
to  the  student,  or  to  his  aptness  to  misapprehend  the  principles  the}'  involve. 
The  essential  terms  of  the  "  sale  contract "  are  classified  and  distinguished 
from  agreements  merel}'  collateral  to  it,  to  bring  order  out  of  the  judicial 
and  text-book  chaos  of  "conditions  and  warranties." 

The  provisions  of  the  Statute  of  Frauds  bearing  upon  the  sale  of  goods 
are  treated  in  connection  with  the  common  law  topics  to  which  they  relate. 
This  method  is  novel,  avoiding  much  repetition,  and  giving  economy  of 
space  and  equal  economy  of  time  and  perplexity  to  the  student. 

It  is  a  small  magazine  of  learning.  —  New  York  Nation. 

It  is  a  most  admirable  treatise. — James  B.  Scott,  Los  Angeles  Law  School, 
Los  Angeles,  Cal. 

It  is  a  pleasure  to  read  a  book  by  one  who  seems  to  thoroughly  understand  the 
relation  of  the  subject  to  the  general  law  of  contracts,  and  who  is  discriminating 
enough  to  assume  that  we  have  read  something  on  the  general  law.  —  C.  A.  Robbins, 
Law  Dept.  of  the  State  University  of  Nebraska. 

To  accompany  the  above :  — 
Selected  Cases  on  the  Law  of  Sales  of  Personal  Property.     By  Francis 
M.  Burdick.     8vo.     Cloth,  $4.50  net. 


COOLEY  ON  CONSTITUTIONAL  LAW. 

The  General  Principles  of   Constitutional  Law  in  the  United  States 
of  America.     By  Thomas  M.  Coolet,  autlior  of  "  A  Treatise  on 
Constitutional  Limitations."   Second  edition,  by  Alexis  C.  Angell, 
of  the  Detroit  Bar.     12mo.     Cloth,  $2.50  net :  law  sheep,  $3.00  net. 
The  design  has  been  to  present  succinctly  the  general  principles  of  con- 
stitutional law,  whether  they  pertain  to  the  federal  system,  or  to  the  State 
system,  or  to  both.      Formerly  the  structure  of  the  federal   constitutional 
government  was  so  distinct  from  that  of  the  States  that  each  might  usefully 

5 


THE  STUDENTS'  SERIES. 


be  exauiined  and  discussed  apart  from  the  other ;  but  the  points  of  contact 
and  dependence  have  been  so  largely  increased  by  the  recent  amendments  to 
the  federal  constitution  that  a  different  course  is  now  deemed  advisable. 

The  new  edition  contains  large  additions.  In  its  preparation,  the 
editor,  while  aiming  to  keep  the  book  a  manual,  and  not  to  make  it  a  digest, 
has  treated  briefly  all  important  points  covered  by  the  cases  decided  up  to 
a  very  recent  date.  He  made  such  changes  in  the  text  and  notes  as  had 
been  required  by  the  many  important  decisions  upon  constitutional  law 
rendered  in  the  last  ten  years. 

It  is  worthy  of  the  reputation  of  the  distinguished  author.  It  is  the  best  book 
on  the  subject  to  be  placed  in  the  hands  of  a  student,  and  is  a  convenient  book  of 
reference  for  any  one.  —Prof.  Manning  F.  Force,  LL.D.,  Cincinnati  Law  School. 

It  is  a  work  of  great  value,  not  only  for  students  in  institutions  of  learning, 
but  as  well  for  the  lawyer,  to  whom  it  supplies  at  once  a  treatise  and  a  digest  of 
constitutional  law.  —  Henry  Hitchcock,  late  Dean  of  St.  Louis  Law  School. 

I  have  examined  it  with  great  care,  comparing  it  carefully  with  the  old  edition, 
and  testing  it  in  various  points.  As  a  result,  it  gives  me  pleasure  to  state  that  we 
shall  use  the  book  both  in  the  courses  in  constitutional  history  and  law  in  the  col- 
legiate department,  and  in  one  of  the  classes  in  the  law  school.  The  work  of  the 
editor  of  the  new  edition,  Mr.  Angell,  has  been  done  with  the  exactness  and  care 
which  an  intimate  acquaintance  with  him  as  a  classmate  at  the  University  of  Michi- 
gan led  me  to  expect  in  whatever  he  undertook.  Judge  Cooley  is  fortunate  in  hav- 
ing so  excellent  an  editor  for  the  revision.  —  Letter  from  George  W.  Kniqhti 
Professor  of  International  and  Constitutional  Law,  Ohio  State  University. 


CURTIS  ON  UNITED  STATES  COURTS. 

Jurisdiction,  Practice,  and  Peculiar  Jurisprudence  of  the  Courts  of  the 
United  States.  By  Benjamin  R.  Curtis,  LL.D.,  late  Associate 
Justice  of  the  Supreme  Court  of  the  United  States.  Edited  by 
George  Ticknor  Curtis  and  Benjamin  R.  Curtis.  Second 
edition,  by  H.  C.  Merwin,  Law  Department  of  Boston  University. 
12mo.     Cloth,  $2.50  net;  law  sheep,  $3.00  net. 

These  lectures  were  delivered  bv  the  late  Judge  Curtis  to  a  class  of  stu- 
dents in  the  Harvard  Law  School,  in  the  academic  year  1872-73,  and  were 
edited  and  prepared  for  the  press  by  his  son  and  brother,  both  lawyers 
of  prominence.  Mr.  Merwin  has  devoted  much  time  to  the  consideration  of 
the  recent  changes  and  developments  in  the  practice  of  the  Federal  Courts  ; 
and  his  additions,  in  the  second  edition,  are  thought  by  those  who  have 
examined  them  to  deserve  the  words  of  commendation  bestowed  upon 
Judge  Curtis's  original  text. 

A  work  of  the  highest  standard  on  the  subject  treated.  —  Boston  Post. 

Cannot  fail  to  be  of  great  service  to  the  student  in  the  prosecution  of  his 
legal  studies.  —  Chicago  Legal  News. 

It  is  by  far  the  best  epitome  of  that  extensive  subject ;  and  the  clearness  of  the 
style  and  orderly  arrangement  of  the  learned  author  will  especially  recommend 
it  to  students.  —  Hon.  Edmund  H.  Bennett,  Dean  of  School  of  Law,  Boston 
University. 

6 


THE  STUDENTS'   SERIES. 


EWELL'S  MEDICAL  JURISPRUDENCE. 

A  Manual  of  Medical  Jurisprudence  for  the  Use  of  Students  at  Law 
and  of  Medicine.     By  Marshall  D.  Ewell,  M.D.,  LL.D.,  of  the 
Union  College  of   Law,  Chicago.     12mo.     Cloth,  $2.50  net;  law 
sheep,  $3.00  net.. 
Mr.  Ewell  has  endeavored  to  produce  a  work  which,  within  a  moderate 

compass,  states  all  the  leading  facts  and  principles  of  the  science  concisel_v 

and  yet  clearly.    In  it  will  be  found  the  substance  of  all  the  principles  stated 

in  the  more  voluminous  and  expensive  works. 

It  is  excellently  done.  I  wish  it  might  be  read  by  every  student  of  law  as  well 
as  by  every  student  of  medicine.  —  Prof.  Hbnky  Wade  Booebs,  when  at  University 
of  Michigan. 

I  can  safely  say  that  for  use  aa  a  text-book,  either  in  a  medical  college  or  law 
school,  it  is  preferable  to  any  book  of  my  acquaintance.  In  his  chapter  on  Mal- 
practice, Professor  Ewell  has  succeeded,  within  the  compass  of  eighteen  pages,  in 
setting  forth  the  general  doctrine  of  the  law  so  comprehensively  as  to  make  it 
highly  useful  for  the  practitioner  as  well  as  the  student.  —  Henry  H.  Inoersoll, 
Dean  Law  Department,  University  of  Tennessee. 


HARRIMAN  ON  CONTRACTS. 

Elements  of  the  Law  of  Contracts.  By  Edward  Avert  Harriman. 
Professor  of  Law  in  the  Northwestern  University  Law  School. 
12mo.     Cloth,  $2.50  }iet ;  law  sheep,  $3.00  net. 

The  justification  of  this  book  is  .  .  .  that  it  is  an  attempt  to  explain 
the  rules  of  positive  contract  law  in  accordance  with  the  actual  historical 
development  of  those  rules,  and  to  classify  and  arrange  those  rules  as  far  as 
possible  in  a  scientific  manner. 

The  cases  cited  and  referred  to  have  been  selected  with  the  greatest  care, 
as  best  illustrating  and  explaining  the  rules  and  doctrines  of  the  law  of 
contracts. 

A  most  admirable  summary  of  the  subject.  —  B.  J.  Ramaoe,  Dean  Law  Depart- 
ment, University  of  the  South. 

A  superior  and  original  work. — 'William  Trickett,  Dean  Dickinson  School 
of  Law. 

It  is  certainly  a  departure  from  the  usual  method  of  dealing  with  the  subject, 
and  I  am  inclined  to  think  a  departure  in  the  direction  of  a  clearer  and  better 
understanding  of  the  law.  —  C.  P.  Norton,  Buffalo  Law  School. 


HEARD  ON  CIVIL  PLEADING. 

The  Principles  of  Pleading  in  Civil  Actions.    By  Franklin  FIske 

Heard.     12mo.     Cloth,  $2.50  net ;  law  sheep,  $3.00  net. 

Under  whatever  system  of  statutory  procedure  a  law  student  may  design  to 
practise,  he  will  find  it  equally  necessary  to  become  familiar  with  the  principles  of 
common  law  pleading.  Mr.  Heard's  work  is  a  plain  and  clear  guide  to  these.  — 
Hon.  Simeon  E.  Baldwin,  Law  Department  of  Yale  College. 

7 


THE  STUDENTS'  SERIES. 


HEARD  ON  CRIMINAL  PLEADING. 

The  Principles  of  Criminal  Pleading.  By  Frankhjt  Fiskb  Heard. 
12mo.     Cloth,  $2.50  net ;  law  sheep,  $3.00  net. 

It  deserves  an  important  position  among  the  text-books  in  every  law  school  in 
the  country — William  C.  Robinson,  Bean  Law  Department.,  Catholic  University  of 
America. 

HOWE  ON  THE  CIVIL  LAW. 

Studies  in  the  Civil  Law  and  its  Relations  to  the  Law  of  England 
and  America.  By  William  Wirt  Howe,  late  Justice  of  the 
Supreme  Court  of  Louisiana.  12mo.  Cloth,  $2.60  net;  law  sheep, 
$3.00  net. 

The  book  differs  in  plan  from  the  merely  antiquarian  and  academic 
treatises  on  Roman  and  Civil  Law.  The  author  has  studied  and  practised 
his  profession  both  in  the  common  law  States  of  Missouri  and  New  York 
and  in  the  civil  iaw  State  of  Louisiana,  and  has  written  this  book  in  the 
light  of  large  experience.  The  special  feature  of  the  work  is  found  in  the 
presentation  of  the  leading  principles  of  tlie  Roman  and  Civil  Law  and  the 
tracing  of  their  development  and  application  in  our  own  jurisprudence  to 
the  complications  of  modern  life,  thus  taking  up  the  comparative  stud}' 
of  the  Civil  Law  and  of  the  Law  as  we  have  it  now.  The  book  will  be  of 
practical  use,  not  only  in  our  numerous  law  schools,  but  to  those  members 
of  the  bar  who  may  wish  to  investigate  the  subject. 

Has  every  quality  which  such  a  book  needs,  and  which,  to  say  the  least,  most 
books  on  Roman  Law  in  English  have  not.  It  is  simple,  clear,  and  intelligible,  and 
we  can  strongly  recommend  it  to  the  student,  or  to  any  one  interested  in  the  subject. 
—  The  Nation. 


HTJFFCTTT  ON  AGENCY. 

Elements  of  the  Law  of  Agency  as  relating  to  Contract.    By  Ernest 
W.  HuFFCUT,  Professor  of  Law  in  Cornell  University  School  of 
Law.     12mo.     Cloth,  $2.50  net ;  law  sheep,  $3.00  net. 
Law  schools  and  law  offices  obtain  in  this  bock  what  has  long  been 
needed,  — a  book  on  Agency  written  clearly  and  concisely  by  a  man  whose 
own  experience  with  his  classes  has  taught  him  what  were  the  fundamental 
principles  of  the  law,  and  how  best  to  arrange  and  present  those  principles. 
The  citation  of  authorities  for  the  purpose  of  illustrating  the  rules  of  law 
is  very  full  and  from  varied  sources.     It  is  not  intended  as  a  special  digest 
of  the  subject,  but  all  the  points  of  law  are  amply  supported  by  the  best 
authorities. 

I  am  particularly  impressed  by  the  clear  and  scientific  arrangement.  —  George 
E.  Beers,  Law  Department.  Yale  University. 

Perhaps  the  most  striking  characteristic  of  the  book  is  the  painstaking  and  accu- 
rate analysis  which  the  subject  has  received.  ...  It  is  logical  in  its  arrangement, 

8 


THE   STUDENTS'  SERIES. 


accurate  in  its  statement  of  the  law,  and  discriminating  in  its  citations  oi  authori- 
ties. —  American  Law  Register  and  Review. 

The  work  is  a  very  good  one  indeed.  —  Chaeles  M.  Slack,  Dean  Hastings  Col- 
lege of  Law. 

''  have  examined  with  some  care  Professor  Huffcut's  treatise  on  Agency,  and 
am  much  pleased  with  it  as  a  text-book  for  the  use  of  students.  —  Prof.  R.  S.  Gould, 
Law  Department,  University  of  Texas. 

To  accompany  " Huffcut  on  Agency" :  — 

Cases  on  the  Law  of  Agency.    By  Ernest  "W.  Huffcdt.     Crown  8vo. 
Cloth,  $3,00  ne^ 


MAY  ON  CRIMINAL  LAW. 

The  Law  of  Crimes.  By  J.  Wilder  Mat,  Chief  Justice  of  the  Muni- 
cipal Court  of  the  City  of  Boston.  Second  edition,  edited  by  Joseph 
Henry  Beale,  Jr.,  Assistant  Professor  of  Law  in  Harvard  Univer- 
sity.    12mo.     Cloth,  $2.50  ne<;  law  sheep,  $3.00  ne«. 

This  new  edition  of  Judge  May's  deservedly  popular  work  contains  large 
additions.  The  editor  states  in  the  preface  that  the  original  plan  included 
no  discussion  of  the  subjects  of  Criminal  Pleading  and  Practice ;  but  it  was 
found  that  it  would  be  better  adapted  to  the  use  of  students  if  these  subjects 
were  briefly  considered,  and  this  has  accord inglj' been  done.  Much  has  also 
been  added  to  the  first  chapter,  which  contains  the  general  principles  under- 
lying the  criminal  law. 

It  is  to  be  especially  commended  for  its  clear  and  concise  definitions,  as  also  for 
its  citations  of  leading  cases  directly  upon  the  matter  under  discussion.  —  From 
3.  H.  Carpenter,  Laiv  Faculty,  University  of  Wisconsin. 

It  is  not  a  mere  synopsis,  but  an  interesting  discussion,  quite  full  enough  to  give 
the  student  a  true  view  of  the  subject,  and  minute  enough  to  be  a  useful  handbook 
to  the  practitioner.  — Neii'  York  Law  Journal. 

To  accompany  "May's  Criminal  Law" :  — 

Cases  on  Criminal  Law.  By  H.  W.  Chaplin.  New  edition,  enlarged. 
Crown  8vo.     Cloth,  $3.00  net. 


ROBINSON'S  ELEMENTARY  LAW. 

Elementary  Law.     By  William  C.  Robinson,  LL.D.,  Professor  of 

Elementary  Law  in  Yale  College.     12mo.     Cloth,  $2.50  net;  law 

sheep,  $3.00  Jiet. 

Contains  a  statement  of  the  principles,  rules,  and  definitions  of  American 
Common  Law,  both  civil  and  criminal,  arranged  in  logical  order,  with  refer- 
ences to  treatises  in  which  such  definitions,  rules,  and  principles  are  more 
extensively  discussed. 

This  work  is  intended  to  serve  three  purposes :  First,  to  form  a  text-book 
for  the  use  of  students  in  law  schools,  and  of  others  who  are  under  com- 
petent instruction ;  second,  to  guide  private  students  in  their  investigation 

9 


THE   STUDENTS'  SERIES. 


of  the  rules  and  definitions  of  law ;  third,  to  render  students  familiar  with 
some  of  the  leading  treatises  upon  the  principal  topics  of  the  law. 

The  book  is  convenient  to  the  instructor  who  will  use  it  as  a  text  to  be  amplified 
in  his  lectures,  and  valuable  to  the  student  who  will  consult  the  references.  —  Prof. 
M.  F.  Force,  LL.D.,  Cincinnati  Law  School. 


ROBINSON'S   FORENSIC  ORATORY. 

Forensic  Oratory :  A  Manual  for  Advocates.  By  William  C. 
Robinson,  LL.D.,  author  of  "The  Law  of  Patents  for  Useful 
Inventions,"  "Elementary  Law,"  etc.  12mo.  Cloth,  $2.50  net; 
law  sheep,  $3.00  net. 

A  new  and  suggestive  work  on  the  duties  and  functions  of  the  advocate. 
The  chapters  on  the  Presentation  of  Ideas  by  the  Production  of  Evidence  in 
Court,  the  Qualification  and  Training  of  Witnesses,  and  on  Direct,  Cross, 
and  Re-Direct  Examination,  commend  the  book  especially  to  the  bar  as  well 
as  to  students. 

The  trained  lawj'er  as  well  as  the  student  will  find  much  that  is  helpful 
and  suggestive  in  the  pages  of  this  volume,  especially  on  the  subject  of 
cross  examination.  It  is  the  result  of  a  long  experience  and  a  constant 
study  of  the  trial  of  causes. 

This  is  a  book  which  no  student  of  law  can  afford  to  pass  by  without  a  thorough 
study  of  it.  It  is  also  a  work  which  no  practising  lawyer  who  undertakes  the  trial 
of  causes,  and  is  not  already  an  acknowledged  leader  in  the  courts,  can  afford  not 
to  read  and  read  again.  — American  Law  Review. 

It  touches  upon  vital  points,  just  such  as  students  of  oratory,  especially  those 
who  are  entering  upon  the  practice  of  law,  need  to  have  urged  upoE  them  in  this 
forcible  way.  — Thomas  C.  Trueblood,  Professor  of  Elocution  and  Oratory,  Depart- 
ment of  Law,  Michigan  University. 


SEDGWICK'S  ELEMENTS  OF  DAMAGES. 

Elements  of  Damages :  A  Handbook  for  the  Use  of  Students  and 
Practitioners.  By  Arthur  G.  Sedgwick.  12mo.  Cloth,  $2.50 
net;  law  sheep,  $3.00  net. 

This  book  is  not  an  abridgment  of  the  work  embodied  by  the  author  in 
his  edition  of  the  well-known  three-volume  treatise  on  the  Measure  of  Dam- 
ages, by  Theodore  Sedgwick.  The  entire  field  has  been  re-examined,  and 
the  whole  law  of  Damages  reviewed.  Its  principles  are  stated  in  the  form 
of  rules  OT  propositions  of  law  such  as  a  court  might  lay  down  to  a  jury, 
and  these  propositions  are  illustrated  by  the  cases  from  which  they  have 
been  drawn.  Wherever  local  variations  from  these  rules  exist,  such  local 
differences  are  stated,  and  their  causes,  so  far  as  possible,  explained. 

As  a  students'  book  it  is  very  admirable.  Probably  no  one  but  the  author  can 
see  how  it  could  be  made  better  than  it  is.  —  American  Law  Review. 

I  can  cheerfully  recommend  the  book  as  an  excellent  presentation  of  the 
elements  of  the  subject.  —  Emlin  McClain,  Chancellor  Law  Department,  State 
University  of  Iowa. 

10 


THE   STUDENTS'   SERIES. 


Throughout  the  volume  the  references  to,  as  well  as  the  illustrations  of,  under- 
lying principles  are  judicious.  It  is  decidedly  a  meritorious  work.  —  Prof.  Chable^ 
M.  Campbell,  Law  Department,  University  oj  Colorado. 

To  accompany  the  foregoing  xvork  :  — 

Cases  on  the  Law  of  Damages.    By  Joseph  H.  Beale,  Jr.,  of  the 
Harvard  Law  School.     Crown  8vo.     Cloth,  $3.00  net. 


STEPHEN'S   DIGEST  OF  EVIDENCE. 

A  Digest  of  the  Law  of  Evidence.  By  Sir  James  Fitz-James 
Stephen.  From  the  fourth  English  edition.  With  Notes  and 
Additional  Illustrations  to  the  present  time,  chiefly  from  American 
Cases,  including  those  of  John  Wilder  May,  late  Chief  Justice 
of  the  Municipal  Court  of  the  City  of  Boston,  author  of  "  The  Law 
of  Insurance,"  etc.     12mo.     Cloth,  $2.50  ne«;  law  sheep,  $3.00  wef. 

A  full  reprint  of  the  fourth  English  edition,  revised  by  the  author,  with 
references  to  American  cases. 

Short  as  it  is,  we  believe  it  will  be  found  to  contain  practically  the  whole 
law  of  the  subject. 


STIMSON'S  LAW  GLOSSARY. 

Glossary  of  Technical  Terms,  Phrases,  and  Maxims  of  the  Common 
Law.  By  Frederick  Jesup  Stimson.  12mo.  Cloth,  $2.50  ne<; 
law  sheep,  $3.00  net. 

This  book  is  a  concise  Law  Dictionary,  giving  in  common  English  an 
explanation  of  the  words  and  phrases,  English  as  well  as  Saxon,  Latin,  or 
French,  which  are  of  common  technical  use  in  the  law.  The  popular  and 
usual  acceptation  of  each  phrase  is  given  in  much  the  same  general  shape  as 
it  stands  in  the  mind  of  the  trained  lawyer. 

A  very  convenient  little  work,  especially  useful  to  students  of  the  law 
—  Chicago  Legal  News. 


WAMBAUGH'S   STUDY  OF  CASES. 

The  Study  of  Cases :  A  Course  of  Instruction  in  Beading  and  Stating 
Reported  Cases,  Composing  Head-Notes  and  Briefs,  Criticising  and 
Comparing  Authorities,  and  Compiling  Digests.  By  Eugene 
Wambaugh,  Professor  in  the  Law  Department  of  Harvard  Univer- 
sity.   Second  edition.    12mo.    Cloth,  $2.50  ne< ;  law  sheep,  $3.00  ne^ 

The  purpose  of  the  work  as  expressed  by  its  author  is  "to  teach  the 
methods  by  which  lawyers  detect  dicta,  and  determine  the  weight  of  reported 
cases."  The  full  discussion  of  this  introduces  many  important  and  interest- 
mg  topics,  such  as  the  following:  How  to  write  a  Head-Note,  How  to  criti- 
cise Cases,  Combining  and  Preparing  Cases,  The  Growth  of  Legal  Doctrine, 

U 


THE  STUDENTS'  SERIES. 


The  Importance  of  the  Unwritten  Law,  The  Respect  for  Authority,  The 
Preparation  of  Briefs,  How  to  compose  a  Digest,  etc. 

A  subject  of  the  greatest  importance  to  legal  practitioners,  and  one  which, 
strange  to  say,  has  never  before  engaged  the  attention  of  any  of  our  legal  writers. 
T7e  know  of  no  work  of  greater  importance  to  the  student.  It  should  be  adopted 
as  a  text-book  by  every  law  school  in  the  country.  —  The  Green  Bag. 

We  commend  this  book,  not  merely  to  students  of  the  law,  but  to  practising 
lawj'ers,  and  even  to  judges  on  the  bench.  It  incidentally  teaches  how  to  write  a 
decision,  as  well  as  how  to  find  out  the  doctrine  of  a  decision  after  it  is  written.  — 
The  American,  Laic  Rerieio. 

Will  be  found  to  be  of  great  value  to  the  student  or  young  lawyer  when  studjang 
by  himself,  and,  if  carefully  studied,  cannot  fail  to  give  him  ideas  which  he  could 
get  elsewhere  only  by  long  experience  and  from  hints  found  scattered  through 
many  volumes.  — Prof.  O.  W.  Aldeich,  of  the  Ohio  State  University. 

Altogether  unique  in  the  way  of  legal  literature.  There  are  very  many  lawyers 
old  in  the  practice  who  will  regret  that  they  were  not  afforded  in  their  student  days 
such  discipline  as  is  suggested  by  this  book ;  and  there  is  no  lawyer  who  cannot 
read  with  profit  its  first  eight  chapters.  —  The  Chicago  Law  Journal. 

Among  the  most  valuable  publications  for  the  use  of  students  which  have 
appeared  in  recent  years.  The  work  abounds  in  fertile  suggestions.  —  The  American 
Law  Register  and  Review. 

It  is  a  valuable  addition  to  the  Law  Students'  Series. — E.  H.  Bennett,  Dean 
School  of  Law,  Boston  University. 

By  the  same  author,  to  accompany  "  The  Study  of  Cases  " :  — 

Cases  for  Analysis.     By  Eugene  Wambaugh,  Professor  in  the  Law 
Department  of  Harvard  University.    Crown  8vo.    Cloth,  $3.00  net. 


Among  the  legal  publications  of  Little,  Brown,  &  Company  are  many 
other  works  particularly  adapted  for  the  use  of  students.  Among  them 
may  be  mentioned:  Kent's  Commentaries  on  American  Law;  Walker's 
Introduction  to  American  Law;  Dwight's  Law  of  Persons  and  Personal 
Property ;  Greenleaf  on  Evidence ;  Parsons  on  Contracts ;  Washburn  on 
Real  Property;  Schouler  on  Personal  Property,  on  Bailments,  and  on 
Domestic  Relations;  Story  on  Equity  Pleading,  and  on  the  Constitution; 
etc.,  etc.    Catalogues  on  application. 


LITTLE,  BROWN,  AND  COMPANY, 

PUBLISHERS, 

254  Washington  Street, 
BOSTON. 

12 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


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